Set the Right Rental Price For Your Property

Set the Right Rental Price For Your Property

As more and more people move into the business of real estate by buying properties and having them rented out, the question I usually encounter from new landowners is how much they should charge for rental fees. If you think that rental price is just one of those minor details, think again. Setting the right price can mean a world's difference in determining your success or failure in the rental business. If you charge too high, you'll most likely have a difficult time finding tenants. This would mean zero profit for you for the duration the place remains unrented. But if you charge too low, you also risk making your business unprofitable.

You can always ask for professional help by having a broker appraise the property for you, but if you want to do it the inexpensive way you may use these simple steps to help you determine the right rental price for your property:

1.) Compare prices to similar properties in your area

You can go online or check your local newspaper to get an idea how much other landowners are charging for properties that are similar to yours (i.e. type of property, amenities, furnishing, size, capacity, etc). A more reliable gauge is checking out rental prices of these properties located in the same area or neighborhood.

2.) Consider your property's location

Location should be taken into consideration when pricing your rental property. Check out the landmarks near your property and determine if yours is located in a strategic location. Renters may be willing to pay a higher price if your place is in a premier location and/or is within walking distance of their workplace or school. Nearby parks, shopping malls and popular sites also add tremendous value to your property and makes it more attractive to prospective tenants.

3.) Ask other landowners and property managers

You may ask other landowners and property managers for information regarding the rental market, pricing and trends based on the current economic situation. Their knowledge and experience in the rental market can help you gain valuable insights on how you should price your property.

4.) Set a base price

Based on what you've researched on, you now have an idea of pricing your property. Set a base price and if think your property has a bit of an edge over the others, you may increase the price a bit.

5.) Lower or increase rental price based on demand

We're all familiar with the basic supply-and-demand principle. If you're getting fewer inquiries than you'd expect, the price may be a bit steep and you may want to lower the price down a notch to attract more renters. If, on the other hand, you're being swamped by a lot of calls, it means that your place is attractive enough for you to increase the rent price (just make sure it's not so high that you stop getting calls).

Happy Renting! :)

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