Hello & Welcome Back to #FabulousFriday! If you have invested in rental property, sometimes establishing the right rental price can be a chore.
Here are some tips and tricks for setting the right rental rate:
Renting your property is a complicated task. On top of management and repair issues, perhaps the most difficult part of renting property is setting the proper rental rate. If the rent is too high, qualified applicants will be scared away — and even if it is rented, the length of residency may be short. If the rent is too low, your cash flow slows and you increase the chances of low quality tenants.
Don’t feel comfortable setting the rent? Property management companies are ready to take the burden off your shoulders, but it’ll cost you. There are many advantages to using management services — they place advertising for you, show the property, review applications, screen applicants, conduct background checks, and prepare lease documents —or...you can do it yourself.
For DIY investors, the best place to start is by looking at rental properties on the internet. Check similar properties in your area for the range of prices.
Supply and demand are factors to consider. If you’re near a college campus for example, there is a constant demand for rentals. However, even if your property is in a trendy or high-demand area, common sense dictates that if your property is in disrepair, has maintenance issues, or lacks amenities, you can’t ask the same price as a well-maintained property.
Other concerns include your property features. Clubhouses, workout facilities, walking paths, tennis courts — all affect a renter’s decision. Square footage, floor plan, and even the view influence the rental rate.
Basic amenities like dishwashers, laundry facilities, fireplaces, covered parking, and other amenities have a great effect on rental rates.
There are market factors to consider as well. For instance, when rent is equal to or exceeds a mortgage payment, tenants will do the math and realize it makes more sense to buy.
After all is said and done, testing and tracking is a time-honored way of setting rent prices. Err on the high side, however — it’s easier to lower prices than to raise them.
However, if you are having difficulty establishing the best rate to charge, maybe the best option is to hire a professional property manager.
Moreover, consider hiring a property management company if:
*You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.
*You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar. If you live out of state, check the state's laws—you might even be required to hire an in-state management company.
*You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if your rental property is solely an investment, and you want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.
*Your time is limited. Even if you enjoy hands-on management, you might not have much time to devote to your business, especially if landlording isn't your day job. And, if you prefer to spend your time growing your business by searching for new properties, arranging financing for renovations, or changing your business structure, then a management company might be a good way to spend your money.
*You can afford the cost. Hiring a property management company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes of approximately 10% of what you collect in rent revenue. If it's a down market and you're able to manage things yourself (or with the help of a resident manager or other employees), you might want to keep doing so until the market turns around.
If you are interested in learning more information about property management services, give us a call today! See you next Friday. Warmly, Susan