In the rental business world, price impacts the ability of a tenant to afford your property. However, price also contributes to how much profit landlords have at the end of every month. As a landlord, you need to price your rental competitively while maintaining a healthy margin. But, how exactly can you do it? To ensure effective property management, you need to weigh on how much to charge using the following factors:
Who your competition is and how much they are charging will have a significant impact on how to price your rental property. You need to look for other rentals close to your property‘s specifications. In addition, you must stick to properties within your area for the best comparison results. As you look at the competition, look for homes that are in similar locations, square footage, number of bedrooms and bathrooms, kind of property, and year built.
Amenities and features matter in terms of pricing your rental property. For instance, your price may depend on whether or not your property has upgraded appliances, hardwood flooring instead of carpet, washer and dryer, onsite or private parking, and other factors.
Although not all amenities will matter to each tenant, you should not sell yourself short by skimming over desirable features. Thus, any amenities and upgrades that separate your rental from the competition must be highlighted.
The Amount You Need to Cover Expenses
Any rental investment aims to make a profit. But, before you decide on the price of your rental, calculate how much is needed to cover monthly expenses. Apart from netting some profit for you, monthly rent from your tenant should at least cover the mortgage. Moreover, you should set aside a percentage of the rent for emergency maintenance and future vacancy costs.
Performance of the Local Market
If demand for rentals is high and inventory is low, this can drive up prices. But, if the economy is not performing well, this can force you to drop prices. Also, you should remember that rental seasons come in cycles and the target tenant pool matters. For instance, a property in a college town will become in demand before a new semester starts.
Frequency of Viewing Requests
If you own a rental property in a desirable location but no one is requesting a viewing, you have a serious problem. You cannot set the rent once and expect it to be that way for good. You need to continually assess and reassess while your property is on the market. Your rental property may sit on the market for a while because of the price. Thus, if you are not getting requests for viewing, the price could be the problem.