How to Set the Right Rent.
As a homeowner renting your property is a complicated task. On top of management and repair issues, perhaps the most difficult part of renting property is setting the proper rental rate. How much should I charge? If the rent is too high, qualified applicants will be scared away — and even if it is rented, the length of residency may be short. If the rent is too low, your cash flow slows and you increase the chances of deadbeat or destructive tenants. So what do you do?
Don’t feel comfortable setting the rent? Property management companies are ready to take the burden off your shoulders, they help big time. It’s going to cost you. There are many advantages to using management services — they place advertising for you, show the property, review applications, screen applicants, conduct background checks, and prepare lease documents — but with the right information you can do it yourself. It’s not necessary but it is a covenant way to go about it.
Check similar properties in your area for the range of prices. The best place to start is by looking in the real estate section of your local newspaper.
Supply and demand are factors to consider. If you’re near a college campus for example, there is a constant demand for rentals.
Other concerns include your property features and amenities. Clubhouses, workout facilities, walking paths, tennis courts — all affect a renter’s decision. Square footage, floor plan, and even the view influence the rental rate.
Basic amenities like dishwashers, laundry facilities, fireplaces, covered parking, and cable TV have a great effect on rental rates. No appliances always charge less.
Another way to check proper rents is to join your local apartment owners association where you can compare rental prices to similar units. Many of them also have newsletters or other publications with advice on not only setting price but other management issues as well. Rental sites or classifieds.
After all is said and done, testing and tracking is a time-honored way of setting rent prices. Always on the high side, however — it’s easier to lower prices than to raise them.