How to Determine a Fair Rental Price for Your Property
For individuals who have no experience in renting out their property, determining a fair rental price can be daunting. On one hand, you don’t want to set the rate too low as to lose out on potential income. But on the other hand, setting the rate too high would make your property unaffordable to renters. So how can you strike a balance? In this article, we’ll give you the lowdown on how to determine a fair rental price for your property.
Mortgage Payment Issue
Property owners who still have to pay off their mortgage consider their monthly mortgage payment and other expenses such as building maintenance when determining the rental price. They then include these into the charges. While this might make sense (you don’t want to make a loss, after all), there are other things to consider. For example, your mortgage could be particularly low if you have a large down payment or very high when your mortgage is based on a low down payment scheme. Basically, looking at your cost is not a good gauge of what you should charge.
Fair Market Rate
What is relevant in is to find out how much other properties in your neighborhood are renting out for. You can either approach an agent to get a quote or look at classified sites like Craigslist. Of course, the quality of the amenities of the houses is difficult to gauge just by looking online. It would be a good idea to browse through as many as you can to know what to expect. It would be helpful if you have a point of comparison.
There are also certain things that can add value to the property. Some tenants are willing to pay significantly higher to rent a particular house compared to another one just around the neighborhood because of good interiors. If you have to get a better rate, here are some aspects to consider:
• Recent upgrades – neutral paint in the living room and bedroom is far desirable compared to bold colors. Repaint your house if the old paint looks smudged or otherwise seem unsuitable for renters.
• Kitchen amenities – having a dishwasher, microwave, and stainless steel appliances are important when it comes to a residential property. People will always go for a house that offers the most convenience as long as they are being charged a reasonable price.
• Garage parking – cars are a necessity in modern life and renters expect that there will be amenities that allows them to park the car safely.
• Safe neighborhood – safety is of paramount importance. Properties located in safe neighborhood command a higher price compared to those located in dangerous communities.
• Proximity to train and/or bus stations – no matter which area you live in, most people give value to the property’s proximity to public transport. Even in areas where majority travel by car, this access is still considered important.
• Utilities – these include hot water, gas, and sewerage. Utilities are usually taken for granted but as a property owner, you have to make sure all these are in working order before renting out the property.
Read property management software reviews to learn how these packages can help you manage your rental properties.