The renovations are complete, the fresh paint has dried, and the new furniture is installed. There’s only one step left to complete before you can list your short-term lease property: calculate the monthly rent for your tenants.
In a market full of competitively matched short-term rentals, it can be challenging to determine how to price yours so it stands out amongst the competition. From utility fees to the market demand, there is an excess of elements that factor into the cost of short-term lease property. Fortunately for you, we’ve narrowed down the list. If you struggle to price your property, our top five actions can help you decide how to charge for a short-term lease.
Consider Your Expenses
In a perfect world, the only cost of homeownership would be a mortgage. In reality, we know that’s not the case. With homeownership comes bills—and many of them. From Homeowner’s Association (HOA) fees to the cost of unclogging a sink, landlords have a lot of expenses that affect their rentals. The best way to supplement these monthly costs? Add them to the rent price.
Along with the mortgage price, factor the cost of your HOA, insurance, and maintenance repairs into your rent price. Since most short-term rentals cover the cost of utilities with rent, include a buffer in your rent price for the gas, electric, and water bills.
While laws do not require landlords to include these expenses with the rent price, including these costs is standard practice across short-term rentals. Covering the fees from utilities, maintenance repairs, and other miscellaneous areas will help make your rental competitive—and help you determine how to charge for its short-term lease.
Finally, while evaluating your costs, consider the expense of turning over the property. Because short-term rentals host several tenants throughout the year, they are more susceptible to recurring damage. Consider the amount you may need to invest in new paint, cleaning services, maintenance updates, and general repairs following each tenant’s lease expiration.
Evaluate Your Property
In the world of rental properties, location is king. When deciding how to charge for a short-term lease, it is essential to consider your property’s location and features. First, consider your target renter audience. Then, evaluate their needs. For example, if you intend to rent to college students who hold summer internships in the city, consider your property’s distance from downtown. The closer you live to popular areas in your town, the more you may charge for rent.
Also, when determining the cost of your short-term lease, consider the amenities and notable features it offers. Most short-term rentals come fully furnished for guests to enjoy. If your property aligns with this demand, contemplate how this affects the price. Likewise, if your rental has features such as a pool or gym access, or proximity to public transportation, these benefits certainly matter when considering the rent price of your rental.
When deciding how to charge for a short-term lease, demand is the only element that matters. Research your intended renter audience and learn what they generally require from a short-term rental. If your home aligns with the demands of your renter audience, you may charge more for the conveniences.
Compare Similar Properties
Imitation is the sincerest form of flattery, and in the case of rental properties, it’s also the easiest way to determine what to charge for your lease. To help decide the pricing of your property, review similar short-term listings in your area. Look for key features such as:
- The apartment’s proximity to popular areas
- The amenities the apartment offers, such as a pool or gym
- Whether the short-term property is furnished or unfurnished
- Whether the property is renovated
- Whether the property contains updated appliances
- If the property includes gas, water, or electric utilities in the rent price
Browse through the attributes of other apartments and weigh how these features compare to your property’s. Once you find several listings comparable to yours, use their prices as a reference point in determining your own.
Estimate the Demand
The higher the demand, the greater the price. This expression holds true universally, especially for rental properties. Demand for short-term rentals is generally highest in the summer; this is when landlords may charge a higher price for their rentals. Higher temperatures and summer vacations set the stage for short-term renters hoping to spend time outside, relocate to new companies, or explore different cities. The influx of people leads to a shortage in housing—and landlords can charge a premium for the property left available.
Likewise, demand for short-term rentals is generally lowest in the winter. The winter brings cold weather, dreary skies, and—oftentimes—a period of vacancy for short-term lease properties. Thankfully, there is a way to mitigate the financial risk of an empty property. Charging lower fees in the winter season may increase your property’s popularity and decrease the chances of your rental sitting vacant. By financially appealing to the renters who need a short-term property during the winter, you’ll ultimately save more.
Determine Your Desired Net Return
Let’s face it: profit matters. A short-term rental provides your tenant with reliable housing and produces the income you depend on. When finalizing the price of your short-term rental, consider your desired return on investment. A reasonable return rate to aspire to is 10%. Calculate the income you’d need from your property to achieve this percentage. To calculate this, compare:
- The price of your mortgage on the property
- The predicted cost of all utilities, HOA, property maintenance, or insurance fees
Combine this number and compare it with the rent price you plan to charge. To calculate if the rent price will generate a 10% return rate, divide the monthly return on your property by the cost of your property. Then, multiply that number by 100. Reference this figure when determining how to charge for your rental.
Advertise Your Rental with Apartments.com
Calculating how to charge for your short-term lease property involves many steps, and—in a true orderly fashion—the best one is last: listing your property with Apartments.com. Whether you’re showcasing the amenities included in your rental’s rent or highlighting its proximity to popular destinations, Apartments.com gives you the platform to showcase your property in its best light. Compare similar properties in your area, and let us help you determine the best rent price with the click of a button. All you have to do is:
Sign-up on Apartments.com’s user-friendly website
- Add your property
- Click “Manage Property
- Click “Rental Tools
- Click “Reports” and then “Rent Comp Reports
When you list your rental on Apartments.com, we provide you with free rent comparison reports. This valuable information 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.
What is the shortest term for a lease?
Month-to-month leases are the shortest leases. Month-to-month leases are housing contracts renewed monthly until the tenant decides to end the lease.
What is included in a short-term rental?
Generally, short-term rental properties include all furniture and a fully equipped kitchen. Utilities are also usually included in the rent price.
How do you write a short lease?
When writing a short-term lease agreement, include the property details, the length of the lease, the price of the rent, and any property rules, regulations, or consequences for late payments. You can always trust Apartments.com to help you create an infallible short-term lease.
