As a landlord, you need to know how much rent you are going to charge your tenants before you begin advertising the rental.
Setting the correct rent price is crucial for achieving an optimal ROI and reducing tenant turnover.
However, how does a landlord establish the right rent amount?
In this post, East Bay Property Management will walk you through everything you should consider when finding the right rental price for your property.
1. Compare Rent Prices with Similar Properties
One of the major factors that help you set the right price for your property is competition.
Compare your rental with another one that is in the same neighborhood, and with one that has similar characteristics and property features.
For instance, if you own a single-family home that was built in the 2000s, and has 2 bathrooms and 3 bedrooms, then you want to compare your rental price with another 3-bedroom, 2-bathroom single-family home that was constructed in the 2000s.
To find these comparable rentals, you can look online, conduct in-person surveys, or check with a property manager.
Nowadays, you can easily view properties for rent in your area on sites like Zillow, Trulia, and Hotpads.
The sites also allow you to keep track of the apartments that get rented quickly, the apartments that lower their prices, and the apartments that have been listed for weeks.
Conducting an in-person survey where you physically check out some of the apartments and compare them to your unit is another option. Make an effort to strike a conversation with the landlord and inquire about the level of interest for the property.
Get a Property Manager’s Opinion
Property managers know what’s renting fast in the region and how your rental compares to the competition. We recommend you call East Bay Property Management, the leading service provider in the region.
2. Adjust the Rental Price Based on the Amenities Offered
When choosing a rent price, consider the amenities your rental offers.
The criteria for rent adjustment is based on:
- View- A tenant will be willing to pay more for a unit with a garden view compared to a parking lot view.
- Upgrades- Units with up-to-date appliances, preinstalled ovens, hardwood floors, or other amenities tend to draw more tenants than those with standard finishes.
- Area- You can charge more rent for a 1,000 square foot unit rather than a similar 700 square foot unit.
- Floor Level- Tenants will be willing to pay more for rent if they live on a higher floor.
- Extras- An extra closet, balcony, or window make a unit more desirable, so you can increase the rent.
3. Ensure Your Rent Yields Profits
Your rent should be able to cover all of your property expenses.
For instance, the rent should cover your:
- Mortgage payments
- Interest, taxes, and insurance
- Recurring costs for maintenance and repairs on the property
- Vacancy costs
The vast majority of property owners, particularly those with huge mortgages or construction loans, don’t make a profit until they sell or have held the property for a long time.
Regardless, if the unit doesn’t make you profit in some way each month, you have either not established the right rent or, worse yet, you have over-invested in the property.
4. Understand the Market Demand
To determine the right rental price, you will need to research the market and change the rent in response to demand.
For example, when the economy is suffering, demand for rentals increases. This is because many people can’t afford to buy a home or pay a mortgage, so they have no choice but to rent. Also, a poor economy can mean that more people are looking to rent smaller and cheaper units because they can’t afford bigger ones.
Another example is that, before the new school year starts, demand for larger rentals increases because families are relocating.
When you understand how the economy is fairing, you can better price your unit.
Here’s the rule of thumb: if the demand is high for your unit, then you can set a higher rent price. If the demand is low for your unit, then you may need to set a lower rent price in order to attract tenants.
The Trusted Choice in East Bay Property Management
Does this all feel overwhelming for you?
We understand how you may feel – and that’s why we’re here to help!
As a locally owned and operated company, East Bay Property Management prides itself in its commitment to offer exceptional services to the community.
Get in touch with us today and receive a quote for our property management services, including pricing your rental property.
Find the perfect rent price for your rental properties is important!
If you set the rent too high, you risk high tenant turnover and property vacancies. However, if you set the rent too low, you won’t be maximizing your ROI.
If you’d like help setting the correct rent, contact East Bay Property Management today.