A Play-by-Play on Deciding Your Monthly Rental Price
Nailing the pricing equation to maximize profit is key when setting your rental property rate. While there is no simple mathematical formula to determine your rental price, there are a few components that can help you to get a ballpark estimate on what to charge each month.
Step 1: Set a “Ball Park” Price
So, how do you set a price for your rental property? The rule of thumb is to multiply your home value by 0.1% to 0.05%, depending on the market. For example:
$250,000 X 0.01 = $2,500 (high estimate)
$250,000 X 0.005 = $1,200 (low estimate)
This “ballpark” mathematical comparison is a great way to set a potential range for your rental price. However, you may have to consider other factors such as time, location, market demand, and comps in the area to get a more precise amount.
Step 2: Research the Comps in the Area
Researching the comparable rental properties in your area is a great way to help you finetune the rental price. You can use the comps to further justify your rental price and make adjustments as needed. Based on the comps, your rental property should be priced to compete, but also be low enough to bring in the targeted audience (ideal renter) for your property.
Step 3: Consider the Timing
We can all relate to the idea of timing during the COVID pandemic. Real estate is no different. When setting your rental price, think about the demand across your area for rental properties. With COVID on the mind of many in the Raleigh area, individuals poised to buy a home may want to play it safe by renting a property until the market and economy settle. As all landlords know, setting a rental price is directly linked to supply and demand.
Seasonally, the demand usually peaks in the summer months because of weather conditions in the northern regions of the US, and most parents don’t want to disturb their children’s schooling mid-year.
Due to the demand in the summer, it is feasible to demand higher rental prices because tenants are looking and will agree to an increased rental rate amount.
Step 4: Think About the Location
The location of your property will most certainly play into the amount you are able to collect each month for rent. If your rental property is…
- Located near local transportation
- Has access to shopping, dining, and nightlife
- Has great schools and low crime
You may be able to demand a higher rental price due to the location and amenities.
Step 5: Be Ready to Negotiate
Once you have set your rental rate, be ready to negotiate to get the right type of tenant for your property. While you may think that renting your home for the most money each year is the top priority, a quality tenant is worth more than their weight in gold! A quality tenant that is respectful to your property and pays the rent on time is often more important than collecting the maximum amount each month.
Want to learn more about how to find the right tenant? Take a look at
At Oak City Properties, we have been taking care of rental properties for years! Our full-service property management company will help you find and buy new rental properties to grow and diversify your portfolio. We will also market the property, locate prospective tenants, and show the home to qualified applicants. Once a tenant is placed in your rental property, we will: collect rent payments, assess and collect late payment fees, provide 24/7 maintenance, help with accounting/tax services, and deal with any court appearances in the event of an eviction.
If you are interested in learning more, give us a call at (919)-232-9222 or check out our website: https://oakcityproperties.com.customers.tigertech.net
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