Five Factors to Consider When Setting Rent for Your Property
Determining your rental rate is one of the most important decisions you’ll make as a property manager or landlord. The rent you set impacts the amount of profit you make, how long your rental sits on the market unoccupied, and how harshly potential tenants judge your property during viewings. Needless to say, setting the right rental rate is paramount for success as a landlord. If you’re struggling to find the right price to tag onto your rental, we’re here to help! We’ve come up with five important factors to consider when setting the rent for your property.
It’s common knowledge that location is one of the most important factors when it comes to real estate. Owning property in a prime spot almost always works to your advantage when it comes to setting rent! Is your property located in a walkable community? Is it within close proximity to schools, shopping and other recreational options? Is it easily accessed by public transit? These are all questions to ask when assessing the location of your rental property. Since most tenants like living close to essential amenities like grocery stores and shopping centres, they’ll be willing to pay more rent for easy access to these conveniences. So, the more the community and location of your rental has to offer your potential tenants, the more you’ll be able to charge for rent.
2. Size and modernity
Size is another important factor to consider when setting rent. When on the hunt for a home most tenants are usually looking for tons of space. So, a rental property with a high square footage is a lot more desirable than a small home with limited living space. You should also consider how modern your space is. These days, tenants are on the market for open-concept homes stocked with up-to-date stainless-steel appliances. If your property features an older dishwasher, microwave or stove, then you may want to consider setting a lower rental rate.
3. Neighbouring properties
When setting rent, you want to strike a balance between making a profit and being competitive in the market. That’s why it’s essential to know the rent being charged by neighbouring properties in the community. To gather accurate information about competing rentals in the area, we suggest you research similar listings and see how your rental stacks up. So, for example, if you’re renting out a one-bedroom apartment in Greenhill, check online to see what other one-bedroom apartments in that neighbourhood are going for. You can also talk to other landlords or property managers who are willing to disclose their rental information. This way, you’ll be able to charge the appropriate amount of rent and be competitive in the market.
4. Your expenses
Making a profit is the end goal when renting out your property. To ensure you pocket some money from your monthly rental income, you’ll have to factor in your monthly expenses. Take into consideration things like your monthly mortgage payments, property taxes, property management fees, as well as home insurance and management costs. When setting your rent, ensure that the amount you charge is able to cover all your expenses and a little more.
5. The housing markets
Last but not least, the housing market. As you know, housing market conditions fluctuate from time-to-time. At times, when property prices are unreasonably high, it’s better for people to rent rather than buy a home – you’ll want to take advantage of these conditions. You should also adjust your rental rate to accommodate for seasonal changes in the market. For example, people tend to avoid moving during the winter months and as a result of this, things slow down dramatically for the rental housing market. In a situation like this, you should lower your rent to increase the chances of attracting tenants.
The rent you set for your property determines how successful you’ll be in the rental housing market. So, it’s important that you get it right on the first go. With our helpful tips, we’re sure you’ll be able to set a competitive yet profitable rental rate with ease.
Need help setting rates and managing your rental properties? We can help!
Get in touch with us today.