How to Set Rent Rate for your Rental Property?
Landlords and property managers are seen deliberating on the rent rate for a long time. They know it is very important to set the rent rate right as any higher and potential tenants will become scared and any lower and profits will take a beating. There are many ways to arrive at the right rental rate.
Main factor that determines the rental rate of a property
Do you know you can arrive at the rental rates of your property even before purchasing it? Yes, the size of the property, the amenities in the area, and renovations required to convert the property into one like other rental properties in the area can easily give you an idea of the amount of rental income you can expect. Of course, you have a minimum rate of return on investment in your mind that will help you in finding the rental rate for your property. It is always better to start with a slightly lower rental rate and adjust it upwards in future than setting it high.
What are your competitors doing in this regard?
The thing to remember always in this business is to keep track of the strategy of your competitors. Know the rental rates of your competitors and understand the difference between yours and their properties. Are you offering something extra like granite counter-tops in kitchens, fancy light fixtures in living room, wooden cabinets to keep your rental rates higher than them? See how homes in your property compare with homes offered by your competitors and then set the rent rates.
Location and size play an important role
Is your property in the heart of the city with quick and easy access to all important amenities? How does it compare with the square footage offered by other landlords in the city? Rental rate of a property on the outskirts of the city will obviously be lower than rental rates of a property in the downtown area.
Have a flexible approach in this regard
You are the landlord, so you are obviously free to set the rate at a price point you like. No matter what price you set, make sure that you are not rigid and remain flexible and prepared to lower the rate if you feel your property is not able to attract large number of tenants. Just remember that it is only a business and not a matter of pride for you when asked to lower the rental rates.
Analyze Your Home Closely
You know your home very well, but you need to analyze your home honestly and think whether you’re charging the right rent or not. For instance, if you’re offering more facilities than that of your surroundings in the form of home swimming pools, maintenance facility and others, you obviously have the right to increase your rent price from that of surroundings a little bit. Similarly, you also need to think the opposite scenario and reduce your rent price a little bit to attract more tenants to your home. It’s always better to renovate your home once a year and increase the rent rate accordingly. Moreover, if you want to increase your home’s rent price, you also have to offer some additional incentives to your tenants. You can always consult a real estate agent for advice.