It’s one of the most common questions we get as a property management company: How much will my home rent for? That’s an important question to ask, because ultimately it affects your ROI and ability to attract and keep renters. If the price is too high you will struggle to fill the property, which will also end up costing you money because you won’t be collecting rent. If you price it too low, you’ll be missing out on potential profit. There are a few key items that make up the complex issue of price when you are dealing with rentals. The desirability of the rental, length of lease required, and location of the property all come together to make up the price.
Desirability
The degree to which people want to rent your property makes a big difference in how much you can ask for it. It can be difficult to be unbiased with what your own property is worth, so using a property management service, realtor or other professional can help give you good feedback. Here’s a simple list of a few main items to look at when trying to determine the attraction of your place.
- Age/Condition of fixtures and appliances. Take a look at all the fixtures and appliances in the bathroom and kitchen. If they are new or in like-new condition you can bump the price up a little. If they are older, damaged or out of style, the price will get dragged down.
- Layout of the home. Have a walk through the rental. Is it sectioned off into small rooms and hallways? Open throughout? Does the layout make sense for modern living or is it set up for a lifestyle gone past? Generally open, modern floor-plans tend to fetch a higher price than sectioned off ones. This is especially true for the kitchen and living areas. An open kitchen with access to the main living space will be worth a premium.
- Storage. Homes with lots of storage, whether it’s through a garage, storage unit or closets will always get a higher rent than those without.
- Amenities. Often amenities are only thought of in a rental community, but even a single family home has them. Homes and apartments with pools, balconies, extra windows and dedicated entertainment or workout space tend to be worth much more than those without.
- Initial Impression. This last one is harder to quantify. It is be a combination of the landscaping, entry way, and impact of the front entrance. Homes that have that something special, whether it’s lovely landscaping, a fantastic front porch, or a beautiful front entry will leave a favorable impression on potential tenants, meaning the price point can be set a little higher.
Lease
The length of lease required for a rental can help to determine its price. Simply put, unless discussing vacation rentals, it’s better for the landlord to have a long-term lease. That means that the shorter the lease length, the more you can increase the price. The same unit that is rented with an annual lease at $1000 a month could get $1300 if the lease is only for 3 months. It’s important to consider the potential pitfalls of short-term leasing however, since you could have to do repairs between tenants, have the property sit empty, and have to go through credit and background checks more frequently when screening tenants.
Location
The final, and often most determinate factor, in deciding a properties price is its location. Check out other rentals in the same neighborhood. Check out realtor sites and Craigslist to see what the going rate is for a comparable home in the area. No matter how beautiful your home is, if the area only supports rental prices of a certain amount, you are likely not to get a whole lot more than that for your place. Also pay close attention to its location in reference to transportation, shopping, dining and entertainment. People will often pay a premium for homes close to main areas of these attractions.