Updated January 19, 2022
Pricing Your Rental Effectively
Pricing your rental effectively and assessing how much to charge for your property is a delicate process. Renters are always looking for the best property at the most affordable price. However, they often may not know what prices are considered affordable and which are too expensive. Once they understand what constitutes reasonable rent, renters can consider the homes that meet their original rental criteria.
As landlords, it’s apparent that this comparison may not always be fair. Certain factors may cause the renter to revisit their original criteria and bend to a higher rental price. While these three factors influence pricing your rental effectively, they require a lot of time and energy to research. They can also easily help you beat the competition and get renters into the home.
This may seem like the most obvious factor, but it’s one that should be mentioned. The closer your property is to surrounding conveniences, like shopping markets, schools, parks, and restaurants, the more reasonable it is to price your property higher than the others.
If your property is walking distance to these local resources, especially schools and parks, the more attractive your property will look to potential renters. A convenience that most landlords don’t consider is public transportation. Not every tenant owns a car, and being close to a bus line can help you earn more in rent.
Being close to conveniences is not the only way that location is important when setting rental rates. Pricing your rental effectively in an older neighborhood that maybe isn’t well maintained will not be the same as rental pricing in a new subdivision. Even if everything else is created equal, such as; square footage, the number of bedrooms and baths, and the yard and garage’s size, the older property will not be worth the same in rent.
Safety is a big concern for tenants. Having a rental in a high crime area can have detrimental effects on your rental rates. Even though tenants need a safe place to live, the neighborhood may be rough and cause your rates to be lower than a lower-crime neighborhood.
Amenities always add a little something extra in the eyes of a potential renter. Things like adding new appliances, access to a pool or gym, and even providing onsite laundry facilities can im-mediately pique interest. However, upgrading your property to attract renters doesn’t have to involve big changes.
Simple improvements like repainting areas that need touch-ups, planting flowers, or watering the lawn to make it greener can make your property shine over the others, regardless of price.
Other amenities that can help earn you more as a landlord, are providing cable or satellite television and internet services. By working out packages with a provider, landlords can lessen amenity costs but earn more in monthly rent on each unit.
Off-street parking is an amenity for those who can not have a vehicle parked next to the curb year-round. In northern states, like Wisconsin and Minnesota, there are parking rules during the winter. The parking signs say which months and times of day a resident can park at the curb. For the rest of the year, they need to find alternate parking. If you have a garage or a driveway for tenants to park in, you can charge more in rent.
It’s important to not only pay attention to local listings but the economic activity in your market. As your area attracts more businesses, and therefore more employment, the housing market will rise due to demand. Keeping on top of these changes can help you influence potential renters to move in and pricing your rental effectively. Watching renter statistics and trends is a great way to keep up-to-date on how renting has changed on a national scale.
2020 has been a crazy year for real estate. Many landlords and investors have worked with their tenants to help mitigate complete rent losses. Some have worked out new rent payment plans due to the pandemic. The overall rental market had grown by 7.9 million renter households between the homeownership peak in 2004 and 2019. This brought the total number to 44.0 million renters. Renting has slowed a little due to the pandemic and the effects have yet to play out completely. There will always be people who need to rent and can’t afford to purchase a house.
These numbers can help you formulate how to attract potential renters now and help you plan for the future. Investing in an area where your tenants may be from many different job industries can help mitigate loss. It's also a good idea to have tenants with many different income levels. This diversity in a rental property will help you if one sector takes a dive.
By combining these three factors, deciphering how much you should charge for your property is still tricky, but not impossible. As Liz Boksanski of Rentometer.com stated, “There are many variables that can impact the rent you can charge for your rental unit including location, building structure, amenities, age of unit, market conditions, etc..” Still, resources like Rentometer provide rent comparison data that can help you evaluate your property’s rental price. Using these tools, renters undeniably see your property’s rental price as the best price for them.
This article was initially published by Ryan Green and Becky Bower on Applyconnect.com.