There are several factors to consider when determining the appropriate pricing for your property. You must select a rental price when you first put your home on the market or when you have a vacancy at your current rental. The perfect pricing will entice potential tenants to stay at your property while generating passive income for you.
Overpricing may make the property undesirable, resulting in higher levels of tenant turnover and longer vacancy periods. On the other hand, charging too little can eliminate the chance of profit and put a property owner in a financial jam. This article will look at some steps property owners can take to ensure that rent is set at an accurate rate.
Look at Comparable Properties to Set the Right Rent
Among the things you should do when deciding how much to charge for your rental is to look at the competition. You want to look for rentals as close as possible to your own. Check out what other landlords are charging for homes and apartments similar in size and amenities to yours.
You should also examine properties in your city, but more precisely, in the same neighborhood as your rental. If one side of town is deemed more desirable, prices can differ significantly. Sites like Zillow, Trulia, and Hotpads make finding rental houses in your region simple.
Finally, note which apartments rent quickly, which have dropped their prices, and which ones have been on the market for weeks. Even if you don’t intend to work with an expert long-term, their advice in the early stages of setting up the rental could be invaluable.
Stay Up-to-date with Current Pricing Trends
Pricing ahead of the curve, while keeping an eye on price patterns in the nearby area, is also a brilliant idea.
For example, in tougher economic times demand for rentals may increase because home prices are too high. That said, people may also be on the look for more affordable rental options. With all this in mind, as an investor, it’s best to gauge what people need, and can afford given specific market trends.
Generally speaking, when demand is high, you can increase rental rates and when there’s less interest lowering your prices could be wise. Ultimately, the best course of action is to consult with your local property management expert about the appropriate price range given market trends.
Many landlords want to set a high rental rate in order to maximize their ROI and earn passive income. However, this is a mistake, and you must avoid the desire to overprice your St. Louis rental.
You want to avoid long-vacancy periods and high rates of tenant turnover. Having a high rental price will only hurt your ability to make solid returns on your investment. With vacancies, not only are you not collecting passive income, your property will still require maintenance and you’ll need to spend money marketing it to prospects.
You need to find the right balance when setting your rental rates. You need to ensure that all expenses can be covered and that you generate some income after all bills are accounted for. But most importantly, you need to ensure that the price is attractive to prospective tenants.
Set Rent According to Amenities
If you’re a property owner with multi-rental properties, it wouldn’t be wise to set a blanket rate for every unit, unless they are identical. The reality is that very rarely do two units offer the same amenities. That said, you can capitalize on this and charge accordingly. Consider the following:
- Views – Does the unit offer a view of the park or the city skyline? This is a more desirable unit and should be charged higher. On the other hand, if your unit offers views of a parking lot, this should also be taken into consideration.
- Square footage – The rent for a unit that 1,200 square feet will be worth more than an 800 square foot one.
- Condition of the unit – The unit with more modern utilities, hardwood floors, and amenities should bring in more rent.
- Storage spaces – Tenants are willing to pay more for apartments with extra closets, or onsite storage as it’s more convenient than renting out a storage unit farther away.
- The level of the unit – Typically the higher up the unit is, the more it’ll rent for. Note, however, that this is not the case in a walk-up.
Pricing your rental currently plays a vital role in ensuring the success of your investment. If you need help setting a price or managing your property consider hiring a reputable property management firm. Keyrenter St. Charles Property Management has established tried and proven procedures that allow us to handle the day-to-day property management while also reducing the stresses of owning rental property for investors.
We will always supply whatever rental management solutions you require, whether for single-family homes, condos, townhomes, flats, or commercial properties. Call us at (636) 707-2000 or email us at [email protected] to know more about our property management services.