How To Set The Right Rental Price For Your Home
Majority of rental property owners always seek to maximize profits from their profits by charging a rental price that will guarantee a return on the incurred costs realized during the construction of the property. Remember rental property is an investment and charging the wrong price for the property will slow down the return on the investment. The rental dues realized from the property should be able to service other costs that accrue on the property such as mortgage, insurance, maintenance and repairs, taxes as well as other utility bills. Therefore, it important for a landlord to determine a best rate possible that will ensure the payment of all bills, allowing the realization of profit that can enable the investment into other properties. Remember that tenants have numerous options from competitors and therefore you should have a price that will attract them despite the competition. It is, therefore, necessary for a property owner to put into consideration the following factors before setting a rental price.
Determine the current home value which may be different from the price you bought the property. Consider hiring a home appraiser to get an accurate evaluation of the price of your home and other issues such as the condition of the home, and the sales prices within your locality. The rental price charged to tenants is normally about 0.8percent and 1.1 percent of the current home value. However, if the home value is high, it is best to charge less rent to attract tenants to the property. High rent prices make the property unaffordable and keep it on the market for too long.
Consider what the rental property rates are in your locality. Find out what the other landlords in the area are charging for their property. Remember the other landlords are your competitors and charging high rates than them may keep your property off the market. Research on websites, online ads, newspaper ads, talk to realtors to find out your competitor’s property that is selling so fast, have been on the market for a while and those that have lowered their rent. The information will help you set a price that will be competitive enough for your tenants. Find out the incentives that your competitors offer, which may indicate an oversaturated area, meaning that you may not get to charge a high price for the property.
If you are considering to rent your property to pay off your mortgage, ensure that you charge a rental price that is equal or more than the monthly mortgage repayment rate. The rental price should also include costs such as insurance, homeowner’s association fee, taxes, maintenance and repairs costs.
Making your property desirable by adding unique amenities will enable you to charge a better rental price for the property. Enhance your home by upgrading it with updated appliances, an updated finish for the ceiling, walls, flooring etc. Consider having better views, extra closet space, storage space, balcony, windows and doors that will make it desirable to your tenants making them willing to pay the price charged on the property because they feel they are getting more benefits. Ensuring your home offers amenities such as security, wide and clean spaces, ample parking, better-plumping facilities, outdoor facilities such as a swimming pool, gym, modern kitchen, modern bathrooms, and accessible location will guarantee you a higher rental price.
It is a notion that high rental price for a property indicates status. However, it is important as you set the high price, to have amenities that give status to your property as well. As the property owner, it is important to find an ideal price point for your property since both high and low rental prices steer away prospective tenants to your home. Find out what the preference of the majority of the tenants in the area and spruce up your home to attract the right tenants to your home.
Always study the market to be able to adjust your rent based on the demand. When the demand for rental property is high, charge a higher rate and when there is less demand, charge a lower price attract more tenants to your property. Several factors influence demand such as a bad economy which causes people to seek rental property because they cannot afford their homes, and hence seek downsizing options. Also when families are relocating because of new facilities in an area such as schools, hospitals, employment opportunities etc.
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