It can be hard to figure out how much to charge for rent. You want to make a good amount of income off your rental properties, but if you charge too much per month, tenants will look for better deals with other landlords. You’ll need to walk the thin line that makes sure you don’t overcharge or undercharge.
Figuring out how to price rentals
One of the first things you can do while pricing out your properties is look at the value of other rentals in your area. This is called looking for the market rent. There are a few ways to learn what the market rent is for your area. First, you can look on websites like apartments.com to get an idea of places in your area. You can also call any properties where you see a rent sign to see what they are charging. Just remember, the price that you are going for should be similar to properties that have a similar floor plan and amenities. You can also tour nearby rental sites and decide if your rent should be similar to what they are charging.
You can also double check your rent based on your occupancy rates. Occupancy rates are just how much of your space is rented out. So, if your rates are lower or higher than your area’s average, you may need to readjust your rent. If your space is fuller than most units in your area, you may be able to charge more for rent, while, conversely, if you have trouble filling up your building, you may be charging a bit too high.
One other thing you can always do is ask your property manager. They may have a handle on the current rental rates in the area. Make sure to double check the information they give you, as your property is still in your control, though. They may also have ideas for how you can improve your property to raise rent more.
How much to actually charge
First, look at the minimum you could possibly charge on rent. This will cover the expenses of the rental, while also covering any debt or emergency funds. You need to also be putting money in your pocket, so if you add up how much each of these cost, you can figure out the minimum you need to be charging.
Second, look at the maximum rental price. Try to find properties that are affordable for the most amount of tenants. Cater to the types of tenants that are reliable and will not cause many issues.
Lastly, look at how many square feet your apartment has. You can’t charge the same price for an apartment that is 200 square feet smaller than another, even if they are both one bedroom. Make sure your price is fair for the amount of space you are offering.
Deciding on your rent is a difficult balance, but with these tips, you should be able to find the right price for your properties.
To learn more, check out the article that inspired this blog: https://www.biggerpockets.com/blog/how-much-to-charge-for-rent