How do I set the price for my rental property?
Setting the price for your rental property is one of the most important steps to securing a qualified tenant in a reasonable amount of time. Running comps on a property may seem like an easy task, but there are often steps missed in this process that can delay placing a tenant.
When I speak with owners about setting the rental income they bring up Zillow and the Zestimate. Unfortunately this number typically can be inflated or even wrong. While it may be a good start, there are other factors that play into the rental market for the specific area your property is in.
When I run a comp on a property I type in the zip code into the top rental websites to see what else is for rent in the surrounding area. This will give an accurate idea of what rentals you will be competing against. Even if your home is equipped with the top upgrades on the market right now, it doesn’t mean placing the above market value for the home will win the first application.
Tenants are seeking an affordable amount of rent and might skip the higher property regardless of the amenities or upgrades. For example, if your home has a washer/dryer with a listing price for $200 more a month than a home in the neighborhood that only provides laundry hook-ups, most likely the tenants will apply for the home with the hook-ups and purchase their own washer/dryer.
Now if your home is marketed at the same rental amount as the home with no washer/dryer, you will win the application and secure a tenant fast. Thinking long term is the goal. Instead of letting the property sit vacant for over month and losing possibly two months of rent, you can lower the price and secure a fast tenant within a couple weeks or even days.
Having the home priced at the fair rental market value also attracts multiple qualified tenants. You want to screen as many tenant applications as possible to ensure you have done your due diligence in placing a tenant.
If you have the home marketed above market value, it narrows down the amount of applications you will receive due to the prospective tenants missing the income verification by $300 or less. Having multiple applications to screen is decreasing the chance of placing a problematic tenant and in return will increase your profits.
There are many factors involved when it comes to setting the rental price for your property. For more information please visit our website or give us a call!