Determining how much to set a property’s rent in the marketplace is an interesting topic. The first thing you have to do is to know the market. It is important to understand what the local market is providing in terms of rental value. Next, you need to consider the condition of the property. This is important in establishing a rental price because tenants will be willing to pay a little bit more for properties that are well maintained and have a few upgrades. The third thing you need to consider is the size of the property. This means the number of bedrooms and bathrooms as well as the amenities that are provided with the rent. You also have to consider what has been done to the property; whether there are granite countertops and an updated kitchen. Most tenants look for upgraded bathrooms and large kitchens.
Another thing that is crucial to how much you can charge for rent, which is often overlooked by property owners, is how your property compares to others in the area. You need to understand what the market can bear before you sent a rental price on your home. Take a look at similar properties and find out what tenants are willing to pay for those places. This will give you a good idea of what you can and cannot charge in monthly rent.
At Select 1 Realty, we meet with many investment groups that have agents from out of state who buy properties here and then hire us to manage those properties. They come in with the expectation that rent is going to be something like $2,500 per month for a three bedroom, two bath home with about 1,300 square feet. We have to break the news that the property will not rent for $2,500. It won’t even rent for $2,000. For these types of properties, the owner might get $1,400 or even $1,500. This creates a problem with the property owner’s entire budget if they are expecting a larger rental income.
What you do not want to do as a landlord is chase the rental market. You do not want to start with a very high rent and then find yourself forced to continually lower that price. When you finally get to the right price and you find a tenant, that tenant might look at the history and think you will lower the rental price another hundred dollars or so. Set the price right from the beginning, so your home rents quickly to a great tenant.
If you need any assistance in properly setting a rental price on your property, please contact us at Select 1 Realty. We will help you understand the rental market and compare the location and condition of your property as well as the size and amenities to others in the area and determine what your best price point is.