How to Set the Best Rental Price for Your Property
Many landlords and property owners take the approach of setting the highest possible rent for their property, expecting to realize the maximum profit from it. However, this approach can cause your rental property to sit on the market much longer than it should, and the lost revenue from vacancies will completely offset any extra income you might have gotten from a higher rent. Obviously, it’s very important to take the right strategy when you’re considering an appropriate rental fee for your property. Here are some tips and recommendations on how to go about that.
Just below the max
One very effective strategy is to price your rental property just below the going market rate in your area, perhaps 5% to 10% below market value. This has a much better chance of attracting high-quality tenants and getting your property rented quickly, than charging a high fee and having it sit unoccupied for months. It’s more important that you get a quality tenant moved into your vacant rental property as fast as possible, as opposed to allowing the property to sit vacant for several extra months because the rental fee is too high.
Some landlords also have the mistaken notion that charging a higher rental fee will attract a better quality tenant. In actual fact, it doesn’t usually work out that way, because even people with low credit scores are generally willing to pay a higher price to get into a good situation. Those more qualified tenants realize they will be accepted at any rental complex, so they’re generally looking for the most advantageous deal.
Consider your rental property features
Yes, you should consider any extra features provided by your rental property, for instance brand-new appliances, accessibility to a community pool, and other similar disadvantages. Just keep in mind that you can’t increase the rental fee tremendously just because of those perks, because adding on another $200 to the rental fee is going to keep your property vacant for quite a while, regardless of what’s included.
Also remember that if most of the rental properties in your area already have many of the same perks and features that your property does, these will come to be expected features rather than standout advantages. If your property is situated in a fairly low-income area, it’s probably not even advantageous for you to install a lot of upgrades, because you will have to over-price your property relative to the rest of the area.
Rentometer is a terrific free website which will compare rental properties in your area that have recently been rented out. On this site, you’ll be able to tell the exact price that those units have rented for, and that should give you a good idea of what you can charge for your own rental property. You’ll know whether or not your asking price is reasonable, and you can adjust your rental fee accordingly.
If you’re really interested, you can sign up for a professional account on the website, and you will then be provided with a whole slew of additional statistics that will help you price your property, so you can charge a fee commensurate with its features.