If you’re a landlord or owner, one of the top things that are always on your mind is pricing your rental property and generating a consistent income, right?
This is especially true if you have a rental property that’s going to be vacant soon, you want to get that property rented fast just so you don’t have to pay for that mortgage while the property is not occupied.
In this article, we will share with you several tips you can use for pricing your rental property correctly and generating a consistent income.
Consider the reason for renting your property.
If you’re renting a property in order to pay the mortgage, make sure the market you’re invested in can sustain a monthly price that at least covers the cost of your mortgage plus fixed costs. If you’re relying on the rent to pay the mortgage, it is not advised to invest in a property in an unstable or low-rent market where you’ll be tight on the margin between monthly rent and mortgage.
If you have little to no mortgage on your investment property and your reason for renting is purely passive income, you can be more competitive with your asking rent as compared to the market in order to guarantee low vacancy and higher renter retention.
Remember to calculate your full monthly fixed costs to include the estimated cost of repairs/maintenance, taxes, insurance, and homeowner’s association fees.
Check local, state and federal rental laws.
Cross-check your price with rental laws in your state. Rent control laws vary from city to county to state and are constantly changing. Ensure your rent doesn’t violate legal limits on rental rates, late fees, and security deposits, especially in areas with rent control, such as in California, New York or Washington state.
Find comparable properties for rent estimates.
Put yourself in the shoes of a renter, and browse local rental listings online. As a renter, your budget and willingness to pay are based on what homes are actively listed. This exercise helps you assess local competition and gives you an estimated rent range. You can also use online tools such as Zillow’s Zestimate’s or Rentometer to find comps from both current and historical listings.
Look for properties that are similar in square footage, bedroom and bathroom count, and amenities. These are the attributes you can compare to find a rental price range and average. Decide if you want to go with the lower, middle or upper range of the market.
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