How much an owner should charge for rent is a common question we receive from home owners looking for help with property management. Factoring the rental price around a house’s mortgage payment is the most common mistake people make. While you don’t want to charge less than what you pay in mortgage, there are several other factors that go into determining the rental worth of your property. Price it too high, and you reduce your chances of finding a tenant, but you don’t want to sell yourself short either.
That’s why we put together a detailed review of a few important factors Ness Property Management Group, Inc. considers when determining a rental price for properties we manage.
Home Market Sale Value
What is your house really worth today? Market value is an organic number that fluctuates based on your house’s age, condition, location, along with supply and demand. It may be worth less than you paid for it, or more. You can acquire a rough idea of your home’s value through different estimators online, including this free home market value estimator provided by Chase Bank. Most home rent for an average of 0.5% to 0.8% of the property’s market sale value.
Local Rental Market
Once you have established your property’s value and calculated a rental fee ranging between 0.5 to 0.8 percent of the property’s value, you’ll want to consider what the average rent is for similar properties in the surrounding rental market.
Your competition will hold a significant sway over how much you charge. If you market your rental property too far above the average market, you will have a difficult time finding tenants. You can get a quick idea through rent calculators such a Rentometer that factor in the current rental prices surrounding your address.
However, don’t depend solely on an online estimator to do your research for you. Explore local listings on Craigslist, Zillow, and other real estate websites to see what similar rental properties are charging. You’ll want to consider several factors, including:
- Your selling points. What is the size of your home? Are you close to popular locations in towns? Does your rental property feature amenities such as access to a pool, gym, tennis courts, country club, etc.
- What is your surrounding demographic? Is it located in a high-income neighborhood or duplexes with a high turnover? What is the crime rate? What is the noise level?
Don’t overshoot your competition. Keep your pricing competitive while covering your costs, such as mortgage payments, annual property taxes, HOA fees, services you may be covering for the tenant (IE: trash disposal), and your annual property insurance premium.
After you establish a rental price and start receiving applicants, you’ll need to begin a detailed tenant screening process. Whether you’re still considering turning your property into a rental or you’re in need of an experienced professional to help you with a current rental home, Ness Property Management Group, Inc. is here to assist clients in every aspect of property management. If you’re looking for a qualified, friendly, and knowledgeable team to manage your property, simply give us a call at (305) 431-5657.