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Determine the rental cost of a property.
Setting the right rent for your investment property is more than just trying to make money.Tenants have a lot of choices when it comes to rental properties, so you have to stand out.Setting a rental price that attracts high-quality tenants and reflects the positive attributes of your property is what this means.You can determine the appropriate rental price with a little research and market knowledge.
Step 1: The value of your property can be calculated.
You should charge renters a monthly amount.This percentage is used by professional investors to determine the rental price of a unit.If you rent out an apartment in your home and it's worth $90,000, use the equation $90,000 x.You could charge the renters a monthly amount.
Step 2: Understand the limitations of the calculation
The flat calculation fails to take into account other factors that add to or detract from the rental value of a property.The rental price might be too high if the home is in a high-income neighborhood.Other considerations, such as location, nearby amenities, design features and layout, also affect how much rent you can charge.Try the same calculation using a range between 1.0% and 1.3%, based on rent rates and availability of similar rental properties in the area.
Step 3: You should consider the market.
If the property is located in a hot market with fierce competition from other rental properties, this formula may make the rent too high to compete with other properties.If you want to find the ideal cost, you should compare your unit to other comparable rental properties.
Step 4: Rent prices for units that are similar to yours are researched.
You can find out how much rent other people are charging.You can look at sites like Craigslist.You can find rental properties that aren't listed on the sites.You should look for units that match yours in square footage, number of bedrooms and bathrooms, age, amenities and location.Make a list of properties that are similar to yours and write down how much rent the owners are charging and theOccupancy rate.Depending on the location, amenities and size of yours, you can ask for the same, more or less rent than these properties.The advertised rental price might be too high.The rental price the owners are asking might be too high if you find a property similar to yours that has been vacant for a long time.When setting the rental price, take this into account.
Step 5: To find a rental price, contact property managers.
If you plan to hire a property management company to look after your property, they should have a good idea of what you can charge.If you want to know what you should be charging, you can ask the property managers in your area.Property managers are responsible for setting the right rent.Property managers know the rental values of comparable properties in the area.
Step 6: You should work with an agent.
Real estate agents who deal with rentals have a good understanding of the local rental market.They are familiar with all of the other rental properties.They are qualified to assess the positives and negatives of your rental property and set the appropriate rental price.They know what tenants like and don't like since they do showings.Tenants will be willing to pay a certain amount for the location, size and amenities of your property.Most real estate agents don't deal with rentals.You might want to contact a property management company or rental agent in your area if they specialize in rental units only.
Step 7: Rent per square foot
Determine the rental price per square foot of unit that is similar in other ways if you can't find similar units in your area.Set the rental price per square foot by applying it to your unit.The rental price can be divided by the total square footage of the unit.Suppose you have a three-bedroom, 1,500 square-foot unit.A two-bedroom, 1,000 square-foot unit is being rented for $1,250 a month.Determine the rental price per square foot of the nearby unit with the equation.You can set the rental price for your unit by applying it per square foot.1,500 square feet x $1.25 is $1,875.The asking price is based on the rental price per square foot.Smaller properties can be rented for more per foot than larger ones.
Step 8: Take into account the location.
The key factor in higher rent is location.If the property is popular and convenient, people are willing to do without certain amenities.The property may be more valuable to families with children.Students may be willing to pay more for rental units.People are willing to pay more for units near public transportation.
Step 9: Consider the amenities.
Renters are willing to pay more for certain things.Rental properties go for higher rents in developments with attractive facilities.One property can command a higher rent if it has desirable features.Rental units can be more attractive if they have pools and tennis courts.A balcony or deck makes a unit more attractive to renters.Renters are willing to pay for parking in urban areas.Renters prefer off-street parking, but nearby parking can appeal to them.People who rent want convenient laundry facilities.The renters will be willing to pay more if the laundry facilities are in the building.
Step 10: The desirability of your unit should be considered.
The rental value is affected by the size and layout of the unit.Tenants are willing to pay top dollar for contemporary design elements.High-end finishes and appliances command higher rents.The rental value is affected by square footage.If a renter sees a 700 square foot one-bedroom apartment, she will be more attracted to the larger one and be willing to pay more.Renters care about the floor level.If there is an elevator, you can charge more for units on higher floors.Tenants will be less willing to climb the stairs if the property is a walk-up.Most renters like the washer and dryer in the unit.Tenants will be willing to pay for the convenience and privacy of having their own washer and dryer that they don't have to share with their neighbors.Tenants can bring their own appliances if you install washer dryer hookups because you don't want to purchase a washer and dryer.Tenants expect air conditioning in areas with hot and humid weather.Renters will be willing to pay more for central air conditioning than a property with window units.You can offer free wireless internet.Quality tenants will be attracted to properties that offer wireless internet due to the convenience of it.The rental value is affected by the layout of the unit.People like an open floor plan.A unit with an open floor plan will command a higher rent than one without it.People are willing to pay for hardwood floors.You will be ahead of the competition if you boast that your property has hardwood floors.Tenants need a lot of storage space.They will be willing to pay more for a property with extra closets.
Step 11: Rental prices can be adjusted based on the market.
The demand for rental properties increases when the economy is bad.You can charge more for your rental properties.You have to charge less if demand for rental properties goes down.If you rent during the peak season, the rental price will increase.During the off season, it will decrease.Consider the type of lease you can offer (month-to-month, a fixed end date, fixed number of months, option to purchase, etc.).What impact will this have on people who are willing to rent?You can charge more for short term leases.If the tenant signs a lease for a year, you can charge up to $1,000 a month.If all applicants are quoted the same terms and prices, it is possible to change the lease.There is a limit on how much you can charge.If your deposit is too high, you may not be able to find tenants.The risk factor of the applicants should be considered when determining the deposit.Credit score, former rental history, income, and criminal history are some of the factors to consider.If you have a good credit score, you should get a lower deposit than if you don't.
Step 12: Decide if you should raise the rent.
Raising the rent for occupied units requires the same considerations as setting it for vacant units.Take a look at the rental market in your area.Do you want to risk losing tenants?For similar properties in the area, compare your rental rates with others.If your rent is less than others, you should raise it.Rent can be raised across the board or for specific units.Think about your tenants.It is difficult to put a price on reliable tenants who treat your property like their own.Decide if you would be willing to lose those tenants if they don't want to pay the increased rent, and if so, whether you'd exclude any of them from a rental increase.You may want to only increase the rent on certain units if you have multiple units.Rent increases should be staggered so that you don't lose tenants at the same time.
Step 13: Check your state's laws.
States in the US have laws about how rent increases are communicated to the tenant.There are laws that say how many days notice is needed before you can increase the rent.Rent control can be instituted in your area.For your state, you should read the Landlord Tenant Act.Residential and commercial lease regulations are different.If you don't know what the laws are in your state, look for an attorney who specializes in real estate or landlord-tenant law.
Step 14: Tell us why the rent is going up.
Explain to tenants why the rent is higher.Tenants should be aware of higher property taxes or operating costs.Make them aware of the added value that comes with the increase.Maybe you are hiring a better janitorial service.Maybe you are going to make some capital improvements.
Step 15: Tenants can be told about the rent.
Tenants know when to expect rents when you have a plan for increasing them.Tenants should be given written notification of planned rent increases.Tenants receive sufficient advance notice if they adhere to the notification guidelines.Sending a typed letter on company letterhead is a good way to be professional.