We will also note at the time of this writing that the rental market is strong and continues to favor landlords , which has enabled rents to grow consistently over the past few years. Most renters want to stay in the same neighborhood, and chances are, once they look around and see that comparable units have the same or higher rents, they will end up staying put.
If your new rent price is close to or below the average price of similar units, your tenants will still likely feel as if they are getting a deal and will more likely accept a rent increase without complaint. However, certain upgrades such as plumbing fixtures and stainless steel appliances can boost property values and aid tenant retention. There are certain features that tenants look for that can help you attract more tenants and be more competitive when searching for a good tenant.
Upgrades and amenities such as an open floor plan or outdoor space may allow you to ask for higher rent. Calculating rental income can help you predict whether or not a property will yield a positive cash flow, but sudden changes in the market or evictions can dramatically affect your actual outcome.
Finding good tenants who pay rent on time, abide by the lease, and take good care of your property will give you a higher chance of great returns. Income Insights is the easy way to help avoid renter payment problems and helps you know which applicants need additional income verification and which to skip. She focuses on topics that empower independent landlords through data, insights, and industry best practices that are typically reserved only for large property management companies.
Most landlords will not attempt to purchase a property unless they can at least cover these basic expenses once the property's units are offered to the public, unless they have a long range plan that includes other owned properties.
While variable costs can be managed, a property's location cannot. While it might make sense to charge the highest market rent possible in the San Francisco area, the rental rate of other neighboring properties and their amenities will determine how much a landlord may actually get.
Landlords can survey neighboring streets and zip codes to determine what properties are renting for and why. Popular online sites offering rental units as well as a local real estate agent or appraiser's office are all good places to do research as well. Once a landlord has determined the area market rent based on neighboring properties, she can confirm this rate with the Housing and Urban Developments annual fair market rental report. While some landlords may choose supply and demand as the sole factor in arriving at a rental rate, others may place their rates somewhere in between the neighborhood market rate and HUD's fair housing rate.
Bigger Pockets offers some suggestions on how to check the market rate for rent in your neighborhood:. The number of bedrooms and square footage should be the same, and if possible, you should try to find out the rent price of units with similar amenities. However, as a busy landlord, you may prefer to use technology to your benefit instead. This list of free online tools will help you calculate your cash flow and determine how much rent to charge, without patrolling the neighborhood.
Select your city to get a gauge of what other landlords around you are charging for rent. The calculator helps you figure out your cash flow, based on expenses like mortgage payments, maintenance, and even vacancies. If you have a new property or have been lax about tracking certain expenses, this calculator offers tables with suggested values for your property.
Determining the fair market rent for your property may not only mean less chance of vacancy and longer tenures, but might increase the number of applicants vying to rent your property. The more applicants you have, the greater your chance of finding good tenants.
Tenant screening services by SmartMove helps you ensure you have a renter in your property that will pay their rent and be a reliable tenant. Landlords receive a credit report formatted exclusively for rental screening, a criminal report drawing from hundreds of millions of national criminal records, a national eviction report, a ResidentScore, and a custom leasing recommendation.
Consider the market. If the property is located in a hot market with fierce competition from other rental properties, this formula may make the rent too high to compete with other properties. In this case, you should survey the current market by comparing your unit to other comparable rental properties to find the ideal cost. Method 2. Research rental prices for units similar to yours. Find out how much rent others are charging for comparable units. Look on sites like Craigslist, Zillow and Trulia.
Drive around the neighborhood to find rental properties that are not listed on these sites. Look for units that match yours in square footage, number of bedrooms and bathrooms, age, amenities and location.
Make a list of properties that are similar to yours and write down how much rent the owners are charging and the occupancy rate.
Assess whether you can ask the same, more or less rent than these properties based on the location, amenities and size of yours. Keep in mind that the advertised rental price of a property might be too high. If, for example, you find a property similar to yours that has been vacant for a long time, the rental price the owners are asking might be too high.
Take this into consideration when setting the rental price for your unit. Contact property managers to determine a rental price. If you plan to hire a property management company to oversee your property, they should have a good idea of what rent you can charge.
Otherwise, you can contact local property managers and ask them about rental prices in your area to get a sense of what you should be charging. Property managers understand the local market and know the rental values of comparable properties in the area.
Work with an agent. Rental agents, property managers, and some real estate agents who deal with rentals have a keen understanding of the local rental market. They are familiar with all of the other rental properties in the area.
This makes them qualified to assess the positives and negatives of your rental property and set the appropriate rental price. An agent will know what tenants will be willing to pay for the location, size and amenities of your property.
For this reason, you might want to contact a property management company or rental agent in your area, as these tend to specialize in rental units exclusively. Calculate rental price per square foot. If you cannot find other similarly-sized rental units in your area, determine the rental price per square foot of unit that is similar in other ways.
Apply the rental price per square foot to your unit to set the rental price. To calculate the rental price per square foot, divide the rental price by the total square footage of the unit. For example, suppose you have a three-bedroom, 1, square-foot unit available. Apply the rental price per square foot to set the rental price for your unit.
Note that smaller properties generally rent for more per foot than larger properties. Method 3. Consider the location. Location is the key factor that commands higher rent. People are generally willing to do without certain amenities if the property is in a convenient and popular location. Students may be willing to pay more for rental units within walking distance to local colleges. Renters also tend to be willing to pay more for units near public transportation. Consider available amenities.
Renters are willing to pay more for certain conveniences and comforts.
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