Rental housing affordability is a severe problem for low-and moderate-income families across the US. While some renters benefit from subsidies or rent-regulation, most low-income renters live in unsubsidized, unregulated units, particularly in low-cost 1-to 4-unit properties. Some of these small rental properties are low-cost because they are low quality or are in low-demand neighborhoods, but there has long been speculation that many of these units are low-cost because their owners set rents below market. However the extent to which owners set rent below market, which owners do so, and why, is unknown. I conducted a nationwide survey with follow-up interviews of the owners of small rental properties to understand below-market rent-setting. I find that nearly half of small rental owners choose to set rents below market. These discounts are substantial, averaging 16% below market. Owner’s rent-setting strategies are diverse and there do not appear to be sharp distinctions between owners who set rent below market and those who do not. However there is evidence that some owners’ lack of knowledge of market conditions contributes to discounts, as does owners’ impression of their tenant’s income.