As a landlord, deciding how much rent to charge can be one of the most challenging aspects of the job. Many factors must be taken into account when deciding where to live. The profit you make as a homeowner is at least partially a portion of your income, further complicating matters.
Your occupancy rate should be as high as possible to minimize tenant turnover and maximize profits. Your ability to attract and retain new renters largely depends on the rental price you offer. What follows is a step-by-step explanation of how to figure out how much to charge for rent even if you’re not mathematically inclined.
- Consider the Time of Year
There can be a lot of interest in renting a home in July, which means fierce competition. Due to seasonal weather changes, most people choose to move during the warmer months. During the summer, students wanting to rent a place for the next school year will increase the number of rental applications you receive if you own property close to a college town. To be safe, it’s best to watch for local trends before drawing broad conclusions about seasonality shifts.
As demand and supply fluctuate, you can raise or drop your rental fee to keep up with the changing market conditions. To compete with local businesses, you must be prepared to do so.
- Get to know your rivals
As previously stated, knowing your competition can help determine the rent you charge during peak rental seasons. Alternatively, you can check out the properties online or book a tour to understand the prices and policies better. Aside from the amenities, it would help if you also kept an eye on how they affect the rent.
Rent may need to be reduced to compete with a competitor that has a more significant number of amenities per unit than you. The opposite is also true. It’s okay to raise your rates if you have lately added or enhanced your services and amenities.
Aside from comparing prices, you should also consider the size of the units and their accessibility to amenities like grocery stores and medical facilities as well as common areas like these, as well as the last time they were remodeled. These aspects will impact both the prices your competitor’s charge and the prices you charge.
- Watch out for Changing Market Conditions
Rent prices are affected by the state of the local and national economies. It’s simple to grasp that you should reduce expenses during a significant economic crisis, and you can raise prices when the economy is doing well. You can understand the price range by checking in with your local competitors.
Reduce your prices in times of low demand, such as during the recent COVID-19 pandemic. Because of the economic downturn, many people chose not to relocate, preferring to stay put and delay life events like weddings and honeymoons, which would ordinarily lead to a large influx of newcomers. As a result, most relocated people did so to avoid densely populated urban areas. It’s critical to keep tabs on demand trends and their reasoning. Rent prices can fluctuate instantly, so keep an eye on the market.
If you’re still not sure where to begin, Tameka Manns Realty Group has experienced property managers on staff who can assist you in your role as a landlord. With our experience in Atlanta investment property management, we can help you increase your net operating income. The right rent can be set with our assistance.