“How much should I charge for rent?” It’s the question every property owner asks at the start of their journey. It’s also a question that doesn’t have a single straightforward answer. Instead, it depends on various factors specific to your property and situation. Luckily, as property managers with over 15 years of experience, we’re experts in pricing rental properties. That means we know just how to guide you toward the right price for your rental home. Let’s take a look at some of the core areas to consider when assessing your rental price:
Condition of the Property
The condition of your property plays a major role in determining your final rental price. Does your property have updated appliances? Are the windows and doors relatively new and weatherproof? Does your property have outdoor areas? Are they usable? The condition of your property compared to others in the area also plays a part. If renters see other options for the same price that are in better condition, their choice to skip over your property becomes quite easy. Your rental property will be more attractive to residents and you can justify higher rent when your property is updated and in good condition. That’s especially true if other homes in the neighborhood could use some TLC. If it’s your property that needs a little love, you might consider investing in some improvements and upgrades.
Competition in Your Area
We’ve touched on the importance of considering other rental properties in your area when it comes to amenities and overall condition. But local competition plays an even bigger role when you consider the mindset potential tenants have when searching for a rental property and how much you should charge for rent. Tenant prospects have a short-sighted mindset. This means that they will probably not spend months on end looking for a place to rent. They typically have a shortlist of important characteristics they are looking for and will settle on the first one in their budget that checks all of their boxes, typically for fear of another prospect renting it first. This means that prospective renters will compare your property to what is available at that moment in time. This makes the measurement of the competition, or the market rate, your most critical data in determining how much you should rent your home for.
Estimating Market Rate
Here are some simple ways to estimate the market rate of your home:
- Search for your address in Zillow or Trulia using their ‘Rent’ filter. This will deliver properties near your address that are currently for rent. Then, it’s just a matter of determining how they are comparable to your property and how that informs the general price range for a home like yours.
- Search the websites of local property managers. Seek to understand what professionals believe properties in your area and comparable ones should rent for. Many of these websites have filtering capabilities. So you can narrow your search and find the homes that most closely match your own.
- Take a walk or drive through your neighborhood, ask neighbors, and get “boots-on-the-ground” knowledge of the properties in your area that have recently been rented. This kind of information is beneficial to really understanding the state of your local market and pricing appropriately.
Seasonality
Price fluctuations are greatly determined by seasonality, and therefore is something you should consider when planning to rent your home. Nationwide, rental property demand is highest during the spring and summer and is at its lowest during the winter months. This means that listing your rental property in the winter will likely result in more time that it sits vacant. Some owners might consider dropping rent prices during the winter to avoid vacancy or waiting until the warmer months to list their property in the first place.
One Option: Hire a Property Manager for Pricing
Property management is, by definition, the operation, maintenance, and oversight of real estate property. This includes the very important element of pricing appropriately and setting you up for success as the homeowner. By hiring a property manager to market, lease, and manage the property on your behalf, you gain access to their expertise. If they’re local to your area, that means hyper-specific knowledge of the market. Essentially, you can be confident your property is priced exactly right - not too high that it will sit vacant and waste money, and not too low where you are missing out on potential profit. A property manager can also help you avoid the common mistake of letting your biases towards your property affect how much you ask for it. You may have an emotional connection to your home if you have spent many years in it or invested in custom renovations. Perhaps you hear that your neighbor has rented their home for $X and believe you deserve the same. These influences can lead you astray and prevent you from making the most out of your rental property. A professional property management team is there to prevent these things from happening and to ensure your best interests are never forgotten.
Final Thoughts: “How Much Should I Charge for Rent?”
So, still asking yourself, “how much should I charge for rent?” Ready to enlist a superb team of property management professionals? Evernest can help. If you are still in the research phase, we have plenty of resources, like our ultimate guide to renting your home series. Or, if you’re ready to get started renting your home with the help of expert property managers, browse our locations to find your local Evernest team!