As a landlord and investor in the real estate market, you may wonder how to set the rent for your property. Setting a rent for a new property is one of the challenges facing property owners. Some landlords opt to compare rent prices with others in the neighborhood, but that isn’t what we recommend. You will end up losing potential income for a very long time.
Many things go into setting rent prices for condos, apartments, or houses. It will be best to consider the property’s long-term value. If you’re building the property for income-generation purposes, the rent prices should cover HOA fees, repairs, mortgage payments, maintenance, insurance, and emergency costs.Are you having trouble setting monthly rent prices for your property? Learn how to set the rent for your property to maximize returns on investment. Click To Tweet
Let’s look at the factors to consider when setting rent for your property.
Consider Outside Factors
Rental prices vary depending on several common factors. Factors affecting rent prices can be floor level, layout, condition of appliances, square footage, number of bathrooms or bedrooms, parking space, and closet space. To gain a competitive advantage, you can also check the incentives offered by other landlords, such as extra storage, free parking space, and free cable.
Strategize for the Right Price
Setting the right price for rent payments will help you generate high income from your property. Long-term clients tend to pay the same rent for many years so long as they stay in your property. You can only have the chance to adjust rent prices when new tenants occupy the properties. Here are the tips to strategize for the right price:
- Determine your monthly costs, then add 30% to 40% for high returns
- Search the rental prices on websites providing apartment searches, like Zillow
- Check how your property compares with others in the immediate neighborhood
- Add or subtract 20% of the cost depending on your property’s competitiveness
- Add the rent prices by 10% when the demand for rentals is high in the area
- Add 5% to the rental price to stay ahead of increasing living costs
Ensure Your Overhead is Covered
Setting rental pricing depends on the costs of building and managing the property. You must maximize the return on investments (ROI) by selecting a price covering overhead expenses. For example, if you spend $500 on advertising, you can add 10% of the cost to cover the advertising cost. Don’t forget the property taxes when setting the rental prices.
Bran Real Estate Services Can Help
If you are new in the rental market, the chances are high that you don’t know how to set the rent for your property. Property management companies like Bran Real Estate Services can help you rent your home, screen tenants, collect rent, charge for rent, and sign a lease agreement on your behalf. Besides, they understand all the landlord-tenant laws.
Contact us today to hire a property manager to help you set rental prices.