There are a lot of factors to consider when it comes to pricing rent. The ultimate goal is to find a price point that meets both the needs of your tenants and your needs as a landlord. The very first thing you should be aware of is what kind of property you’re marketing and who you’re marketing it to. Who is your audience of potential renters, and how much can they typically afford? What kind of amenities do you offer? Is your property located near entertainment venues, shopping centers and other places of interest? All of these questions provide a great starting point for pricing rent. However, there is plenty more you should know.
Tips for Pricing Rent
1. Know Prices in Your Area
Doing this research is an absolute must. Location determines everything, and even towns separated by a few miles can vary significantly in rent costs. Take note of similar rental properties in your area and calculate an average. While there will still be some differences to factor in when it comes to pricing your rent, this will at least provide you with a solid baseline. In addition, it will give you a good idea of how much people in your area are willing to pay. From there, you can tweak the number depending on specific amenities you offer.
2. Consider the Time of Year
If you list your rental property during fall and winter, vacancy could become a problem. To this day, most people prefer to move during the spring and summer months. Children are on break from school, it’s nice out, and it’s the perfect time for a fresh start. On the other hand, winter months mean holiday travel, bad weather and complicated schedules. Pricing rent during colder seasons, therefore, usually involves lowering the cost. However, during high-demand months you can increase the cost and benefit without any additional effort. Good timing will save you plenty of headaches later!
3. Network with Other Landlords
Various platforms and online communities give landlords the chance to connect and share information. Speak to other landlords about their experience and ask them how they priced their properties in the past; they may suggest tools you haven’t considered previously. Even beyond pricing rent, this is an excellent way to problem solve. Most landlords have probably experienced an issue similar to yours in the past, and networking can bring you added support.
4. Refer Back to the 2% Rule
When in doubt, there are always tried-and-true standards to revisit. One of those is the 2% rule, which suggests monthly rent should not exceed 2% of the rental property’s total value. While this can vary slightly, it’s a suitable rule of thumb to maintain. Making a stable profit as a landlord is highly important, but your potential tenants should be able to afford the cost of living. Unfortunately, while rent prices have increased 31% since 2010, only half of the American workforce can afford a one-bedroom apartment unit. If you can, stick to the 2% rule and your renters will thank you for it.
How All County Denver Metro Can Help
All County Denver Metro Property Management is here to help property owners have confidence in the quality of their tenants and the security of their property through knowledgeable and trustworthy property management services. From managing tenant relationships to pricing rent to lease enforcement, we look forward to working with you to see how your investment can be a long-term, stress-free asset. For a complimentary quote, call us today at (720) 575-6100.