Finding Your Rental Rate Sweet Spot
The pricing of your rental can be a stressful aspect of being a landlord. If your rental rate is too high, your rental property may sit vacant for a prolonged period of time. That, in turn, leads to a loss of income. Too low and you also risk losing money. Take a few minutes to assess your rental income property. It can help to ensure that you price it right can make a significant difference!
Location, Location, Location
In a tourist destination and college town, such as Durango, location of your rental property plays a huge role in rental rates. If your rental property is located downtown, rental prices reflect this. Downtown rentals often go for higher rates than what is charged further from this central location. With the numerous shops, bars, and restaurants in downtown Durango, tenants will appreciate and pay for the proximity to these hot spots.
Take a Peek Inside
When was the last time you updated your kitchen or bathroom cabinets? Does the carpet of your rental property have stains or worn spots? If the inside of your rental looks run down or dingy, you might not be able to find a tenant willing to pay what you are charging. Updated interiors can fetch higher rents, but that doesn’t mean you have to invest a large amount of money. Updating the knobs on your cabinets or splashing a coat of paint on the walls can make a formerly unappealing property stand out and shine!
Rental Rates and Assessing Your Competition
Is your rental property not getting the traction you thought? Take a look at the rental properties around your rental. Websites such as Craigslist, Zillow, HotPads, and Trulia can help to establish an appropriate rental rate. You can also find a home appraiser. These professionals can walk through your rental and give you an accurate assessment of your rental property. Rental comparisons with other properties in the area is essential to your overall profitability.
Effects of Incorrect Rental Rates
It might be possible to find a tenant willing to pay a high price for rent. However, this may not always be the case. According to SmartAsset, you will need to know the market value of your rental property. A rough rental estimate is to charge around 1% of your home’s value.
Keep up with the year-over-year growth rate for national rent to avoid losing rental income. Rental rates went up by 2.0%, with an 18% increase over the past five years. You will want to account for when pricing your rental. These factors should make your rental property lucrative to prospective tenants, while also making sure that the rent you charge covers the expenses of operating a rental property.
Too low of a rental rate, will leave you unable to cover your expenses. Take into account aspects such as mortgage payment, insurance, maintenance, and emergency repair funds. This way, you will ensure that all of your expenses are covered.
How Property Managers Can Help
If you are having a difficult time determining the best price for your rental property or would rather devote your time and energy to other things, there are professionals that can help. The purpose of a property manager is to not only tend to the rental price assessment tasks, but they can do much more than that to make your life easier as a rental property owner. Property managers keep up with the legal aspects, as well as the day-to-day responsibilities and responses to the needs of your tenants. If this sounds like something that you could use, let the folks at The Property Manager know and they will be more than happy to help!
References
Affordable ways to increase the value of your rental
How to determine rental price: Tips from TenantCloud
How to do a property management market analysis
How to figure out how much you should charge for rent
