Setting the right rental price for your property is a crucial decision that can impact your success as a landlord. Pricing too high might discourage potential tenants, while pricing too low could lead to missed income opportunities. This guide will walk you through the essential steps to price a rental home effectively.
How Much Should I Charge for Rent?
Determining how much to charge for rent can be challenging, as it depends on various factors specific to your property and its location. One of the key factors for success when you list your house for rent is to determine how to price your rental for the market.
Research the rental value of homes
Conducting research is the most important thing you can do before embarking on any adventure as a landlord. Look for homes for rent like yours in size, location, features, and amenities. When you list your rental on Apartments.com, we provide you with free rent comparison reports. This valuable information in the rent comparison report gives you a clear understanding of the market so you can price your rental right, compare your property’s value to other similar properties, and review market conditions like the average days on the market and the average rent rates. In addition to this valuable information, your rental home will appear on all 12 of our network sites to help you reach potential renters where they’re searching. By listing on Apartments.com, you can reach millions of renters and fill your vacancy fast.
If you don't use Rental Tools, check out other online real estate websites and talk to local real estate agents to get an idea of the average prices in the area.
Another factor to consider regarding location is whether your area is rent controlled. Rent control is a government-mandated cap on the amount you can charge for rent. If you’re not sure about the laws in your state, be sure to do your research before setting a rent price.
You can also check HUD’s fair market rents to gain a better understanding of your city’s and county’s rent prices. These numbers are updated yearly, giving you a good understanding of how rents have changed over time.
Evaluate the features and amenities
Next, consider the unique features and amenities of your property. Features such as the number of bedrooms, bathrooms, square footage, appliances, finishes, and additional amenities like a pool, gym, or parking space can sometimes justify a higher rental price.
Seasonality
Some regions may experience higher demand during specific times of the year, like the summer or back-to-school season. You can adjust your rental price accordingly to capitalize on these fluctuations throughout the year. You can even lower the rent during the winter when demand is low to attract more tenants.
Test the market
After these tips, if you're still uncertain about the ideal rental price, consider initially listing the property at a slightly higher price and be prepared to negotiate. If you receive little interest or feedback, you can gradually lower the price until you find the right balance that attracts tenants.
Why is it Important to Charge Appropriate Rent?
Attracting quality tenants
Charging an appropriate rent helps attract tenants who can comfortably afford the property. Quality tenants are more likely to pay rent on time, treat the property with care, and stay longer, reducing turnover and related expenses. If you have your rent too high, you could attract tenants who may not be able to afford rent, which leads to less income for you.
Maximizes your profit
Setting the right rent ensures you're not leaving money on the table. Overpricing can lead to more extended vacancy periods, while underpricing can result in lost income opportunities. Appropriate rent maximizes your rental income potential and ensures you can cover your mortgage and any other costs.
Positive online reviews
Overpricing your property can result in negative online reviews and a poor reputation in the community, making it harder to attract future tenants. Conversely, fair pricing can lead to positive reviews and referrals.
Remember that setting the right rent is about maximizing your income and attracting and retaining quality tenants. By creating a balance between charging competitive rent and ensuring that it covers your expenses, you will have a successful and profitable rental property investment.
