When listing your property, you must prepare a lot of things from the photos to use in advertising as well as set the right pricing. Rent should be set appropriately for you to generate revenue and easily compete with the other rentals around the neighborhood.
Charging too high can make tenants move on to the next rental property and lose their interest in staying at your space. Reasonably setting the rental cost can attract long-term tenants that are perfect for your property.
It’s important to look into your competition when deciding how much to charge for rent. For your rental property to become profitable and get the best tenants, we at Keyrenter Hampton Roads have put together the factors you need to consider so you can determine the perfect rental price.
Look at Comparable Competitors
When looking to set the rental rate, you want to look at comparable properties to see what they’re charging. Consider the following:
Location
This is the most important factor when identifying the right rental rate. The more centrally-located your property is, the higher rent you can charge your tenants. Properties near schools, transportation, leisure facilities, and shops are popular among renters. You can charge higher if your house or apartment is near these essential services.
Start with looking at properties within the same town as yours and can also compare to the neighboring towns so you can better gather important data and help you set the pricing range.
Type of Construction
Rental rates in multifamily units are generally cheaper compared to single-family homes as some amenities are shared with other tenants living in the same building. Single-family homes usually have a lot of advantages like more space inside and outside the house, may allow pets, and offering more privacy which makes it easier for you to ask to set a higher rent.
Size of the Home and Amenities Offered
The bigger your rental home is and the more bedrooms and bathrooms you have in the house the higher the rent you can charge. These 2 rooms are the most used inside the house and the more you have of both, the higher rent you can charge. The more desirable the amenities you offer can also give you a higher chance to increase the rent.
Age of Property
Newly constructed buildings or houses charge higher rent compared to older ones. As the property ages, renters may not want to pay higher accommodation costs. If you want to increase the rental cost, you can consider remodeling or renovating the space.
Where to Look for Competition
You must compare rental costs within your neighborhood and look at rental properties that are like yours in size, and style, and offer similar amenities, so you can appropriately set the price.
You can find these properties in 3 different ways:
- In-Person – Check out the houses or apartment complexes in person and compare them to your property. You can ask the landlord some questions a potential renter would ask when looking for a rental.
- Online Platforms – Check out popular sites for listings that are similar to your property. Go to Airbnb, Zillow, Hotpads, or Trulia. Track which ones are rented out fast and those which remain available for 2 weeks or more.
- Get a Property Manager’s Opinion – Hiring a rental property manager can make your life easier in terms of setting the rental price. Because of their experience, they can easily gauge how much rent is reasonable to collect for your type of property.
Determining the Marketability of your Property
Even if your property is occupied for the longest time, you must remain up-to-date in terms of market demand. Adjust the price depending on the tenant’s needs or based on what’s happening to the economy. If market conditions are bad, you may need to lower your price.
You also need to consider the season when you’re renting out your property. Families moving to a different location usually do so during the summer break before their kids start school so the demand for rentals is higher. The greater the demand for the rental property, the higher the accommodation cost is. When the demand is low, you may also have to adjust the rental price to entice renters.
What’s more, to determine if your property is marketable see if interested tenants request to view your property. If the rental cost is set reasonably, the perfect tenants will be enticed to check it out. Charging higher may push away potential tenants and move on to check another property.
Importance of Setting the Right Rental Cost
Charging rent must be done appropriately to help you cover the property maintenance, utility fees, mortgage, and other fees associated with owning a rental property. If you’re still paying for the mortgage or construction loans, you won’t be able to enjoy the revenue or actual profit yet.
What’s important is the rental costs should be able to cover these expenses and more. If it’s not, you may have over-invested in the rental, or the rent was not set properly.
When setting the right rental price, it should cover:
- Maintenance and repairs
- Vacancy rate
- PITI mortgage payment if applicable
- Up to six percent of the monthly rental cost as your profit
Bottom Line
One way to entice the perfect long-term tenants is to set the right price. It should be based on the type of construction you have, the amenities you offer, the number of rooms, the age of the property, and most importantly, the location.
Sometimes, you may find it difficult to set the right rate for your property but here at Keyrenter Hampton Roads, we can take care of checking out the competition, marketing your rentals, maintaining high occupancy rates, and taking care of your tenants. Contact us today to learn more!