Have you ever wondered how much you should charge for you rental property, or how much you should expect to receive in rent?
There are a lot of different factors to consider when you think about how much you can charge for your rental property.
Know Your Local Rental Competition
If you have a condo and you’re trying to rent that condo out, one of the big questions that you need to ask yourself is: who is my competition nearby? This includes any apartment buildings in your neighborhood. A tenant who is looking to settle into a condo very well might change their mind and choose an apartment, especially in our area where we have had so many new apartment complexes built recently.
At New Heights, we’ve seen a lot of competition for our rental properties in those apartment products. They are offering very competitive rates and often have wood floors, marble countertops, and convenient dog-walking stations and car-washing stations. It can be tough to rent out a condo when you are competing with apartments offering all these amenities.
Make sure you know the competition for your particular investment property. Make sure you have done some research on that competition so that you know what you might be able to charge. Obviously, if you are trying to rent a single-family home, the apartment complexes are not going to be your competition. You’ll want to look at other single-family homes, or even some townhomes, in the area and figure out what those properties are renting for.
Be Flexible with Price Adjustments
Another important concept that people miss when they are setting their rent price is that they often compare it to what their last tenant paid, and raise it $100 or so. This might not be realistic. The market conditions might have changed since that last tenant moved in to the property. You will need to adjust your price up or down depending on what is going on in the market. You must be very aware of the surrounding market value.
Consider Your Property Condition
Condition is another big factor when it comes to pricing your rental property. Has the property been kept up, or is it starting to show some wear? Are the carpets looking worn? Is the paint scuffed?
If you aren’t willing to put some money into those types of improvements, you are probably going to have to ask for a little bit lower in monthly rent. At New Heights, we always look at location, competition, and the condition of the property when we are trying to help you decide the best price to put on your rental property.
Measure the Cost of Vacancy
The last thing that some owners forget when setting their rent price is that sometimes coming down $25 or $50 per month in rent is really not going to cost you all that much over the course of a year. However, It will save you weeks and weeks of vacancy. You’ll actually end up with more money in your pocket at the end of the year by lowering the rent rather than leaving it vacant while you try to chase higher rents. Don’t get hung up on a specific price, because if you can get a good tenant in your property quickly, you can save yourself a week or two weeks of vacancy.