Landlords are expected to keep up with the ebb and flow of the rental market, simply because it will keep their business profitable. Austin, in particular, is experiencing a significant shift in rental rates due to several factors. While this is out of your control, acknowledging it and making the necessary changes are within your control.
With declining rates, what should you do to keep your rental property in the race?
Key Highlights:
- Austin rent is declining due to a surge in multifamily housing construction, which has increased supply and intensified competition among landlords.
- Competitive pricing is essential, but landlords can also differentiate by emphasizing property location, amenities, and overall value rather than relying solely on rent reductions.
- Strategic upgrades boost appeal, and affordable improvements like fresh paint, new flooring, and smart home features. Even energy-efficient appliances can help properties stand out.
- Tenant retention is more cost-effective than constant turnover; offering renewal perks, prompt maintenance, and strong landlord-tenant relationships helps keep occupancy stable.
- Marketing and online visibility matter. High-quality photos, virtual tours, SEO-optimized listings, and strong curb appeal can attract renters even in a crowded market.
What is Causing the Rental Rate Decline?
Rent prices are going down because of the most obvious reason in most cases: supply is increasing. The construction of new apartment buildings is catching up with the demand in Austin, forcing landlords to lower their prices to gain an edge over the newer rental units.
The city has issued several permits for multifamily rental properties between April 2024 and March 2025, with 64.5 permits per 10,000 residents. Soon enough, supply will outpace demand, and the fewer potential tenants will intensify the competition.
How Should You Respond?
Research Similar Properties
Research the prices that your competitors set so you can strategically adjust your own rental rates. You can use the average as your baseline and consider other factors, such as the amenities you offer and the location of your rental property. Many tenants would opt to pay a little more for rent if their needs are met.
Upgrade Your Rental
You don’t have to reduce your rent amount, but you do need to convince potential renters why your property is a better option than cheaper alternatives. You can make budget-friendly upgrades such as new flooring, fresh paint, smart home features, and energy-efficient appliances. These small investments can enhance both tenant appeal and property value.
Focus on Retention
You don’t have to compete for potential tenants if you manage to keep your existing renters. Find ways to incentivize renting your property by offering renewal perks, addressing repairs promptly, conducting regular maintenance, and fostering strong tenant relations. Keep in mind that it’s more cost-effective to retain tenants than to cover turnover costs.
Improve Your Marketing Strategies
Your visibility in the rental market plays a huge role in occupancy rates. Now that competition is fiercer as other options get cheaper, you have to highlight why your rental property is still better than the rest. Use high-quality photos and create virtual tours. Potential tenants who can’t attend open houses may choose yours simply because they have a better idea of what the property is like.
Optimize Your Listing
Apart from marketing efforts, you can boost your visibility online through proper search engine optimization (SEO) practices. You can achieve this by using keywords that your target market will often look for, such as the number of bedrooms, proximity to amenities, window views, accessibility, and more.
Review Your Operating Costs
Given that the rental market may force you to reduce your rent price, you can compensate for the loss by making adjustments elsewhere. Cut unnecessary expenses and go for improvements like energy efficiency. Replacing outdated appliances and systems can help you get started, as well as installing smart devices that automatically reduce energy consumption.
Long-Term Strategy
With new rental properties prepared to accept tenants, you need to think ahead and learn how your rental continues to be profitable amidst the change. You can be smart about the upgrades you make and measures to take to ensure a return on your investment.
- Replace your old appliances with new ones. Most of the newer appliance models come with extra features that tenants are already familiar with, and they don’t use as much energy since they will be in good condition. This both increases tenant appeal and lowers your utility bills.
- Install smart features in your home. Smart homes are becoming more mainstream, which means not upgrading puts you at a disadvantage. Even something cheaper, like smart locks, will be appreciated by your tenants due to the convenience it brings and the security it provides.
- Establish an online presence. You might’ve noticed that many potential tenants prefer to browse through listings online instead of finding vacant properties in person. Creating a strong online presence helps build your credibility and reputation, serving as assurance for people who want to rent your property.
- Improve your curb appeal. When you take professional photos, the exterior of your rental property is the thumbnail for your rental listing. It needs to be eye-catching for both online and in-person visits to increase potential tenant interest.
Rental Rates FAQs
1. Why are rental rates declining in Austin, TX?
- Rental rates are falling due to a surge in supply. New apartment complexes and multifamily housing projects have outpaced demand, forcing landlords to adjust prices to stay competitive.
2. Should landlords always lower their rental rates to compete?
- Not necessarily. While strategic reductions may be helpful, landlords can also focus on upgrades, amenities, and superior tenant service to justify maintaining higher rents.
3. How important is tenant retention during a rent decline?
- Retention is critical. Keeping reliable tenants reduces turnover costs, avoids vacancies, and provides steady cash flow. It’s often cheaper to keep a current tenant than to find a new one.
4. What long-term strategies should landlords adopt to remain profitable?
- Landlords should focus on property upgrades, strong online presence, curb appeal, and adapting to tenant expectations. Strategic reinvestment ensures the property stays competitive even as market conditions shift.
Now’s The Time to Go All In
With the looming market shift, you need to be as hands-on as ever to stay on top of everything. Efforts need to be doubled as competitors multiply. While it may be difficult for landlords to do all that alone, there are always experts in the field who can lend a hand.
Industry professionals like Austin Property Management can help you with everything from marketing to maintenance, ensuring that your investment property is in top shape. We don’t want you to be left behind, so let us offer the knowledge and resources you need to thrive.
Contact us, and we'll be happy to tell you more about our property management services.
