One of the hardest tasks a landlord has is properly pricing his or her rental property. A price too high could increase the amount of time between tenants and lead to more missed payments, whereas a price too low means you will not maximize your profit on the rental. The following are four ways to ensure you price your rental property accurately.
Know The Factors
It is essential to know the major factors that play a role in the cost of a property. Although each property is different, the most applicable factors to consider include the following:
- Total square footage
- Number of bedrooms
- Number of bathrooms
- Property location
- Length of the lease
A property that is larger in square footage and is in nice, highly populated areas most often cost more. Also, the longer the lease the less the monthly cost is for the tenant. Other notable factors to consider include the time of the year, the season, pet policies and utility costs, among a large number of other factors.
Conduct Proper Research
The next step to take is to determine the rent cost of other properties that are similar to your rental, which should give a good indication of the approximate range your rent charge each month should be. With that said, keep in mind that many landlords are not able to get a tenant if the listing price is too high, so it is best to look at rental properties with current tenants. Also, consider the ability of the tenant to pay each month. In some instances, it is best to price your rental a little lower to ensure the tenant is able to make payments on time each month.
Ask a Real Estate Agent
A real estate agent – particularly one that deals with rentals – can help you make informed decisions as to how much to charge for rent each month. Realtors study the local market for a living, and they have a clear indication as to what the average cost for a rental similar to your rental costs, how the market responds to certain prices and what time of the year is best to get a new tenant. When in doubt, seeking assistance from a real estate professional is always a great way to go.
Consider The Demand
One of the biggest factors in determining the price of your rental is the demand. The fact is your rental property costs what others are willing to pay. If you know the demand is higher in the summer, then you can get away with charging higher prices during the summer months. If the demand for rentals slows down in the winter(or due to another factor) then it might be best to price the property a little lower or be more patient as you find the right tenant.
The Bottom Line
Each rental is unique, and it is important for each landlord to determine the unique factors that influence how much they can charge in order to maximize their monthly profit, eliminate headaches from tenants who are unable to pay and ensure quick turnaround when a tenant leaves.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129