Have you ever wondered, “how much should I charge for my rental property or how much should I expect to be able to get in rent”? A lot of people come to us and ask that question: what do you think I can charge for my rental property?
Well, there are a lot of different factors that we need to consider when we think about how much you can charge for your rental property. If you have a condo and you are trying to rent out a condo, one of the big things you need to ask yourself is, who is my competition in the vicinity. That includes nearby apartment buildings that I might be competing with. A tenant who is looking to live in a condo might well decide to settle for an apartment. Especially in our area, we have so many new apartments that have come up recently. We see a lot of competition in those apartment products. Those apartments are offering very competitive rates; they often have a wooden floor, marble countertops, pools, dog washing stations, and car washing stations. There are a lot of things to compete with if you’re trying to rent out a condo against an apartment complex that has all of those amenities. So make sure that you know the competition for your particular investment property and make sure that you have done some research around that competition, to know what you might be able to charge.
Obviously, if you are renting out a single-family home, apartment complexes are not going to be your competition. So, you are going to look at other single-family homes. You might have to look at some other townhomes in the area and figure out what those properties are renting for.
Another thing that people generally miss when they are setting their rent price is that they often think, “my last tenant paid $1,200 a month, so I am going to ask my new tenant to pay $1,300 a month.” Well, that just might not be realistic. The market conditions might have changed since the last time that tenant moved in, and you might need to adjust your price down or up accordingly. It just depends on what's going on in the market, so being very aware of the surrounding market area is very important.
Condition is another big factor when it comes to pricing your rental property. Have you been keeping the property up? Or is the property starting to show wear; is the carpet looking worn, is the paint getting scuffed and it needs to be repainted? If you're not willing to put the money into those things, then you probably have to ask for a little bit lower rent. So we always look at the location, your competition, and the condition of your property when trying to help you decide the best price to put on your rental property.
The last thing that some owners forget is that coming down of a price $25 a month, or sometimes even $50 a month, over the course of 12 months does not really cost you a whole lot. If it saves you weeks in weeks of time on the market of vacancy, you actually end up with more money in your pocket at the end of the year, so don't get hung up on saying I need $1,200. Because sometimes for $1,175, if you can get somebody to move in tomorrow or next week, and you could save yourself a week or two weeks or three weeks of vacancy. So, over the course of 12 months, you would actually have earned more money by taking a little less in rent each month.
I hope that information has been helpful to you. If we can ever answer any questions for you, please feel free to reach out to us; we will be happy to help you in any way that we can.