The rental market has been blowing up in recent years. Currently, 36% of households live in some sort of rental property.
There's serious money to be made by owning a rental property as rental prices have continued to soar in 2022, for instance.
While no one wants to bleed their tenants dry with astronomical rent prices, how do you price a rental property with a fair rental price?
We've dug in deeper to find some things to keep in mind to help you determine a fair price when you're collecting rent.
Look at Comparable Properties to Learn How to Price a Rental Property
Although there are plenty of futuristic ways to learn how to price a rental property, the first and easiest method for collecting rent rates is to look at similar properties.
That might sound obvious, and it is, but some aspects are slightly less straightforward.
What is a comparable property, anyway? That aspect is not as clear as you might think. It also plays a big part in finding tenants for your properties.
When it comes time to set a fair rental price, you should think about all of the details of your property. The number of bathrooms or on-site parking are two examples of common variables that can impact rental prices.
So say you're hiring a rental property management company to let out a two-bedroom apartment. For the sake of this example, this apartment has two bathrooms in a neighborhood popular with younger professionals.
From there, it becomes easier to create a portfolio to help set the right price. You can look at two-bedroom apartments in that area on a property listing site. You could even create a spreadsheet and track prices over time, if you felt like getting advanced.
The first rule of the market is that the market sets the price. If a property is technically worth a certain amount but no one's willing to pay it, it's not really worth that much. So as you go forward, you need to factor that willingness in when setting a fair rental price.
It can be hard to get concrete data in this regard, however. One way you could factor this in is if you have someone turn down one of your rental properties due to the price being too high. If you're able to, you might ask them what price they'd be willing to pay.
If you're able to get that data point, you might use the feedback to adjust the price accordingly. If you were to get several responses, you might be able to use those numbers to drop the rental price by 10%, for example.
These are also some of the best reasons to work with a property management team. Rental property management companies keep up with all of these variables for you to set a fair price, without you having to do anything at all.
Looking For Rental Property Management?
Once you've learned how to price a rental property appropriately, you'll want someone to manage it for you! It's our great pleasure to serve the Phoenix, Arizona, area for all of their real estate rental needs.
If you're ready to take the next step toward being an investment property owner, contact us today with any questions!