How To Price Your Rental Property In A Competitive Market
Whether you’re buying an apartment unit or converting your vacation home into a rental property, investing in real estate can earn you extra income.
That said, as more rental properties are built and more homeowners are now renting out their vacant rooms to the public, the rental property market has never been more competitive than today. Thus, if you truly want to obtain the benefits of passive income, you want to price your rent effectively.
If you don’t know where to start, this article shares valuable tips to help you determine the best price for your rental property.
- 1. Consult A Professional Property Manager Or Realtor
Property managers and realtors live and breathe the real estate market every day. They know the market better than you and keep track of rentals in your area, so they know what other similar properties are charging. Hence, using a property manager is one of the best ways to ensure you get the right price for your property.
Like a financial adviser, a property manager can give insights into your investments, particularly if you’re new to the industry. What’s more, if you have numerous rental properties, they can help manage and streamline daily landlord duties.
By working with a professional property manager like Hills Direct, you can experience better results, faster turnarounds, and maximum pricing for your rental property as well as excellent customer service. If you’re interested in their services, click here.
- 2. Figure Out Rental Costs
One of the most important things to consider when pricing your rental property is its operational costs. Start by calculating every expense on your rental property. You must factor in mortgage payments, taxes, insurance, maintenance, vacancy costs, and your time managing the properties.
From there, you’ll know your breakeven margin. You can narrow down your price range and strategize more confidently.
- 3. Check Competitors’ Prices
Look at what price your competitors are going for. This step helps you evaluate local listings and estimate the rent range.
You can use online tools to find historical and current listing comps. Look for similar properties in terms of square footage, property types, and amenities for a more accurate comparison. After all, a studio-type apartment will be more expensive than transient houses. The number of bathrooms and bedrooms will impact the price too.
If you can’t find enough local listings in your neighbourhood, you can expand your search to the rest of the town. However, note that moving just one street over can significantly influence the pricing.
- 4. Understand Your Rental’s Value
Knowing your property’s strengths and weaknesses is critical in zeroing in on the right price.
Factors such as square footage, location, and bedroom count can directly impact your rental property’s value. Other amenities to consider include:
- Upgrades: New furniture or appliances and even a newly-furnished wall can drive up a rental’s value.
- Proximity: How close your rental property is to shopping areas, local parks, and transportation can determine its attractiveness.
- View: A good view, especially in destination areas, influences your rental price in the right direction.
Everything from having a balcony to providing free parking can influence your rental property’s value. So, you should take note of every detail. For example, a similar neighbouring apartment unit is rented for AUD$2,000 per month. Since you’ve recently installed a granite countertop in yours, you can feel confident listing your unit slightly higher.
- 5. Do Not Forget Seasonality And Economy Fluctuations
Rent is subject to the laws of supply and demand. Depending on your location, consider the seasonality when pricing your rental property. For instance, if you have a beachfront property, demand tends to rise in the summer and fall during winter.
In short, when demand is high, feel free to increase your prices. During the lean season, don’t forget to lower your pricing. Peak and lean seasons vary from region to region, so do your homework and learn more about the seasonal rent trends in your area.
Along the same lines, you must consider the economy and overall market prices. Economic issues such as civil unrest, inflation, or a global pandemic can impact demand, and you’ll need to adjust your price accordingly.
Update your price every time you lease your property, even if it’s just to accommodate gradual inflation. This guarantees that you’ll continue to get fair value for your rental property.
Takeaway
Finding the right price for your rental property can be challenging. Price it too high, and you’ll scare off potential tenants. Price it too low, and your property may be perceived as ‘problematic’ or ‘cheap.’ The compromise is somewhere in between. By following the above tips, you can get closer to the ideal price, minimizing vacancy loss and maximizing profit.
Daily Bulletin
