As you assess how to set the correct rental price for your property, you’ll be wading through a lot of numbers in pursuit of the one you need. Ultimately, you should be guided by the word “correct.” Yes, there is a correct rent, because it will strike a delicate balance: It will be low enough to attract renters, but high enough to generate profit for you. Here’s what will factor into your decision.
Your Property’s Value
Hint: It’s probably different than what you paid for it. This number fluctuates according to age, comparable properties, location, and more. You can consult websites such as Zillow, or you can hire an appraiser for a more accurate idea of the current value. The rent will eventually be set at a percentage of this, usually between 0.8 percent and 1.1 percent.
Rent Control Laws
Familiarize yourself with any local laws that affect what you can charge for rent, security deposits, and late fees. Your property may be subject to rent control laws in New York, Maryland, California, and Washington, D.C.
Think of this as the real estate equivalent of peer pressure. Are you going to base your rental price on what all the other landlords are charging? Well, yes—partly. Prospective tenants will be familiar with those properties as they consider yours, so you should make sure that your rent is reasonable. Take a look at other comparable listings on websites such as Craigslist and Trulia to see how you stack up.
The correct rental price will change, depending on when you need to set it. For example, if you have a vacancy in the summer, families will pay more so that they can get settled before the school year. The state of the economy is also looming over your decision. When the economy is bad, tenants will be looking to downsize to smaller and cheaper units, and may have firm cutoffs when it comes to rent.
Remember that mortgage on your property? Ideally, the rent will cover that monthly number, as well as the estimated cost of repairs, taxes, insurance, homeowners’ association fees, and other fun stuff.
Your property will have amenities and drawbacks you may have to compensate for in the rental price. For better or worse, here are some details that make a difference.
- Condition of appliances
- The view
- Square footage
- Floor level
- Closet space
- A balcony
- Natural light
As you learn how to set the correct rental price for your property, you should keep coming back to a number that makes sense. A good property management company can help you gather the information you need more quickly and accurately, and interpret what it means. R. Russell Properties has been in rental home management in Orlando for four decades, and when it comes to rental price, we know your magic number. If you need guidance in central Florida, contact us for more information.