As rental housing demand continues to surge, more landlords are testing out dynamic pricing to figure out what to charge tenants based on real-time supply and demand—adopting a software system similar to how Priceline.com determines hotel rates and airfare, CNNMoney reports.
Landlords use real-time supply and demand to determine what to charge tenants. Therefore, when demand for apartments is high, the software will advise the landlord to raise rents on vacant apartments. In turn, when demand drops, the software will suggest lowering rent rates. The software automatically lowers the rent based on day-to-day market conditions until a tenant takes the apartment.
Dynamic pricing is used to determine the rent of some 5 million apartments today, says Andrew Rains, president of the multifamily division at Rainmaker Group, a company that produces one of the software packages widely-used by landlords to determine prices.
“When pricing is done manually, emotion enters into it,” says Rains. Software also helps avoid overpricing units that can lead to vacancies and steep losses for landlords.
Source: “Priceline for Landlords May Determine Your Next Rent,” CNNMoney (Feb. 19, 2014)