Finding "the right price" is crucial when looking to fill your vacancies fast in today's competitive rental property market. Pricing your available property For-Rent incorrectly can be costly!
Follow these 5 tips to help save you time, money & headaches when pricing your property for-rent:
1.) Consider the location and demographics of your property
A property's location can significantly affect the amount of rent that an owner can demand. In high-end rental markets such as those located near prominent schools, essential commercial store chains, and reliable commuting usually tend to rent faster and at a premium rate vs. properties that are located in lower class markets, where crime & insecurity is high and the surrounding infrastructure is lacking or rundown.
2.) Research Your Competition
Your ultimate goal as an Investor, Homeowner or Landlord is to rent your property at a price that is suitable for your investment needs, and also competitive for your local area housing market. Have you done a search recently in your area to see what others are charging for comparable properties, or what other properties have to offer vs. your property? Using your competitors property as a baseline, you can decide where to start with pricing your rental. Even if you can't find an exact comparison to your property, studying other properties is the best place to start. To find comparable or comparisons of your property, simply do an online search through google for "properties for-rent" in your local area to find out what others are offering and for how much.
3.) Consider the Condition,Layout, and Size of Your Property
Besides the exact location of your property, factors such as condition, property design and size will ultimately affect your rent value. A prime example can be a smaller 2 bedroom single-family home that rents for more than a 3 bedroom single-family home in the same area. Even though the 3 bedroom home may have more square footage and bedrooms, the 2 bedroom could have been recently renovated with updates that command more rent income, while the 3 bedroom unit may have simply had a casual paint turnover. If you have recently finished a long-term lease occupancy with your tenants, chances are your property is in need of updates. Tenants may cause normal wear and tare over the years to a property which may only require minimal repairs for new tenant occupancy however, keep in mind that once that unit is refilled with new tenants and only minimal repairs performed prior, the unit continues to become outdated. Between changes in tenants, your goals should be to remain competitive with your local market, and to attract and retain occupancy.
4.) Consider the Market demand for home Rentals in your Area
Factors such as the weather season of the year, saturation of rentals on the market in your area, or demand shortage are all variables that can impact how much more or less you can charge for your rental property. For example, in winter month's renters are more hesitant to move, while in seasons such as spring and summer renters are proactively seeking change in their environments. When your market is considered at its low or slow point and your property becomes available for-rent, you might just want to adjust your asking amount accordingly.
5.) Keep your (ROI) "Returns On Investment" & Added Expenses in Mind
Finally, keeping track of your expenses such as renovation cost, unit turnover work, new amenities, cleaning or marketing cost can help when determining a final rent value for your property. For example; If you have recently added a new amenity such as a dishwasher that was $500 in purchase cost, you could divide your total cost for purchase between 12 months for $41.66 that would be factored in your new asking price for-rent. Each property, location and circumstances are different, so use your discretion or seek professional advise to be on the safe side with what your property's needs to be considered rent ready. Remain competitive with your local area housing market, but don't overkill your project or property into an expense point of no return.
By following the above tips, you should be in a position to receive at least an average or above market rent for your rental property. From here, it's up to you to decide how to apply these tips strategically so that your unit remains attractive to high-quality renters, and economically profitable to you.