Updated October 13th, 2020
Setting prices on rental properties can be tricky, but don’t panic. Although you do have to set a price, rent prices are not permanent. As a landlord, you can always adjust the rent through a fair process and time if the conditions are appropriate.
Setting Rent Prices For Different Rental Property Types – Does it Matter?
Let’s dive into key factors to consider when setting prices on different types of rental properties.
Start by considering your rental property type.
Is it a multi-family single-family or something else? Consider this before other factors, so you don’t compare apples to oranges when looking at nearby property rent prices.
- Apartments, Condos, Multi-Family Units – Turnover tends to be higher with smaller units as tenants view these units as a temporary situation before having a family or growing in their career enough to move to a bigger place. Charge more for units like this where higher turnover will cost you more, and tenants view rent prices as a temporary cost. Visit rentometer.com to see what the average rent is in the area. If you have updated amenities, you could charge more.
Wear and tear are also often higher in these types of units because tenants see their stay as short term and care less about the condition of their living space. Charge more to mitigate the risk.
- Single Family Homes – A historically lower turnover rate in large standalone single-family homes presents landlords with the potential for a long term steady income stream with fewer turnover costs.
While you shouldn’t sell yourself short on what your property is worth, consider offering slightly lower-than-market prices to families looking at staying in the area and your rental property for several years. This small incentive could save you thousands of dollars in turnover costs in the long run.
Next, to find the ballpark range of what you should charge for rent and research other similar rental properties in the area.
Adjust Prices to Your Situation
Adjust prices up or down from here according to extra amenities, perks, or inconveniences your unit may have in comparison. We’ve listed many of these other price factors below:
Tenant situation
If your properties are located in a college town where turnover is high, consider charging more for your time and the wear and tear that multiple moves have on a property. At the same time, ensure you are competitive in the environment your property is located.
Amenities, perks, and services
Do you offer snow removal, garbage, recycling, lawn maintenance, property maintenance, or a pool? For your benefit, makes a list of these things and add them up to ensure you are not cutting yourself short. These fees add up and must be taken into consideration when setting rent prices.
If utilities are not included in rental fees, depending on the time of year and size of the rental, your tenant may be paying a large monthly chunk of money.
Consider this when setting the monthly rent payment. Your future tenant will be sure to consider this when making their decision.
Location
For example, even if you are renting out a small apartment, if it is close to a downtown area and easily accessible to restaurants, stores, and transportation, rent may be comparable to a large three-bedroom home just a few miles away. Such locations are typically in high demand.
The safety of your location is an essential factor. If your property is located in an area with a reputation for break-ins and regular police activity, this will affect your property. It is important to recognize this in the prices you charge for rent. Area security can vary by just one block, which will drastically affect rent prices.
Furnishings and appliances
Are they old or outdated? Do you even provide them? You can charge higher rent prices if providing brand new appliances while you will be wise to lower rent to reflect older and outdated appliances (and furnishings if included).
Make a List
Make a pros and cons list about your rental unit for each of these factors. Along with good online tools like Rentometer, you can base your rental prices on that list.
*The following blog post was contributed by BaseRent.
BaseRent is a one-stop app for landlords’ entire rental business. We automate the rental process through one online platform. At BaseRent, we’re developing an easy-to-use application that provides landlords with long-term rentals the opportunity to manage all aspects of their business operations from one place. We leverage commonly used rental applications to maximize your profits and minimize time spent shuffling paper. BaseRent is landlording simplified and re-imagined.
If you liked this article, subscribe to Rentometer’s email newsletter to stay updated on the latest rental housing trends.