How To Determine The Appropriate Price for a Rental Property - Diamond and Diamond Lawyers
  • Wednesday, 17 February 2021

How To Determine The Appropriate Price for a Rental Property

So, you’ve bought a new property intending to rent it out. How do you determine the price of a rental property as a first-time landlord? 

Determining the price of a rental property can be challenging. If your rent is too low, it could be detrimental to financial goals. Setting it too high could leave your property vacant for an undetermined period.

Charging the right price can help find reliable tenants that won’t struggle to make the monthly payments. Finding this balance between the best rental cost and a dependable lessee is where it gets tricky.

There are options to explore to help you reach this decision. We can assist you if you find yourself in this situation.

Read Your Neighborhood’s Rent Control Laws

Read Your Neighborhood’s Rent Control LawsRent control is a government program to set a limit on the price of a rental property. The aim is to keep the cost of living at a reasonable rate for those tenants with low income. 

The laws governing this program are executed at the local level and vary according to the municipality. Consult an attorney for more information regarding these laws and determine what restrictions govern your city before setting a rental price for your property.

Certain macro factors affect real estate investors, which influences the prices. We suggest you have a look at them.

Research the Rental Value of Homes in the Area

Looking at your market competition can assist you with setting a rental price. Properties with similar features usually charge the same rent. Once you know what others are charging, you can set a price based on what you have to offer. 

The more value your property has, the higher you can set your rent. The location of the rental and proximity of amenities can also add value. Calculate the price of a real estate property here.

Consider Your Area’s Rental Demand

Consider Your Area’s Consider Your Area’s Rental DemandRental DemandThe demand for property rental can positively or negatively influence your property’s value.  Here are some common effects of demand that you might see:

  • During a bad economy, fewer people can afford to purchase a house, which results in a higher demand for rentals. The increase in demand for property rentals creates an increase in tariffs. Another effect is that some property owners will lease smaller and cheaper rentals a lot faster.
  • Before the start of the school year is another period when there’s an increase in demand. This rise is due to parents trying to get their families settled before school starts. This demand is usually for more significant properties. 
  • When there’s a low demand for rental properties like yours, your rental fee should also be lower. You can increase your price when the demand is high.

 

Rental Property Related Topics

Before You Decide How Much Rent to Charge

  • Research rent control laws for your area.
  • The value of your property is essential. Consider the following when setting a price: parking/garage on the property, picturesque views, fully furnished, etc. 

Factors in Calculating the Rental Fee of a Property

  • View your competition in the market.  Learn the price of rental property in your area. 
  • Determine a reasonable amount that you would like to receive. Include the following: mortgage, property taxes, insurance, maintenance, etc. You would also need to add a “cushion” for any unexpected repairs.
  • If you want to boost your property’s value, you’ll need to save towards this improvement and include it in your rental fee.
  • Assess the demand for property rentals in your area.

Tools Used to Calculate the Property Rental Fee

If you are still confused about how much a rental property’s price should be, contact a real estate lawyer from Diamond and Diamond Law for guidance.

PRO TIP

“Deciding the right rental property price could help you easily find tenants.”

– Diamond and Diamond

Final Word

By following these tips, you could successfully set an excellent rental price that will ultimately boost your bottom line and reform your business. Contact us if you need help, or if you want to sell your property instead of renting it.

How to Determine the Appropriate Price for a Rental Property FAQs

What is the average late charge for rent?

Most landlords charge 5% of the monthly rental fee.

How do I put my house up for rent?

You can use Zillow Rental Manager, which automatically distributes your listing to other real estate properties for advertising. You can also make use of the marketplace option on Facebook and other local community groups.

Amid COVID-19, how can I facilitate safe viewings for prospective tenants?

Many realtors are conducting virtual showings. If a tenant wants an in-person visit to make a final decision, you should follow the standard COVID-19 protocols. Social distance, refrain from shaking anyone’s hand, wear a mask, and don’t touch any of the surfaces.

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