As a property investor, you have to set the rent price for your assets. Naturally, you might wish to charge a higher rent so as to get as much return on your investment as possible. However, by overpricing, you run the risk of repelling high-quality prospecting tenants, causing your properties to remain vacant.
On the other hand, if you charge a lower rent, you are likely to attract all sort of prospects, but high chances are, you will struggle to achieve your targeted return on investment and growth objectives.
So, how do you ensure that you set a fair rent rate for your Salt Lake City investment property? Below are valid points to help you determine the correct rent price.
1) Look at the location
The location of a property has a significant influence on the amount of rent that you can charge. Units in high-end areas, near schools, reliable public transportation, or with essential social amenities tend to attract higher prices than those found in low-end neighborhoods. The primary reason for this is that many quality tenants prefer such properties and will readily pay whatever amount it takes to occupy them.
2) Focus on the available Attractions and Amenities
If your property is close to recreational facilities and attractions, or if it has desirable features you can request a higher rent. Renters are more than willing to pay if it means enjoying convenient comforts like pools, laundry facilities, tennis courts, magnificent scenery, or even covered parking.
3) Look at the size and layout of the property
Irrespective of which neighborhood a property is in, its size and design have a direct impact on its ultimate rental price. For instance, a three bedroom house will attract higher rent than a two or single bedroom house within the same neighborhood.
4) Consider the condition of the property
The physical state of your property can dictate how much rent you can request. When shopping for rentals, tenants are on the prowl for clean units that have functional kitchens and new renovations. Hence, if your property is outdated or looks worn out you will have no choice but to charge a lower rent.
5) Use the actual value of your property
Properties differ in size, features, location, and even utilities. All these variations affect the assets’ overall value. Take the time to determine what the real worth of your rental asset is. For example, if after evaluating your property the total figure comes to $ 100,000, you can multiply that amount with .011 to determine how much monthly rent you ought to charge. In this illustration, that will be $ 1,100. A majority of professional property investors use this method.
Although this approach offers a range within which to price your assets, it is not sufficient by itself. It fails to consider variables such as the neighborhood, nearby amenities or design features, all of which are likely to increase or decrease the property’s actual value. For this reason, you need to consider other factors as well.
6) Compare the rents of similar units
Drive around neighborhoods, or use platforms like Zillow, Trulia or Craigslist to identify homes that are similar to yours. Look for those that match yours in terms of the number of bedrooms, age, amenities, location and square footage, and find out how much they are asking for in rent. While at it, investigate the occupancy rate as well as the vacancy period. If the property has stayed vacant for too long, there’s a good change the landlord has overpriced it. Once you have ascertained how much similar units are going for, you can decide whether to match their prices, charge higher or lower.
7) Use the square footage
At times getting a property that matches yours apple-to-apple might prove daunting. Fortunately, you can still use the nearby units to determine what amount of rent to charge. Simply find out how much those owners charge per square foot and use that rate to calculate yours. For instance, if the monthly rate for a nearby 1,400 square foot, three-bedroom apartment is $1,820, then its rental price per square foot is $1.3, i.e., ($1,820 / 1400 sqft). Using that rate you can determine the average rate for your two bedroom 950 square-foot apartment. Which will be 950* $1.3 to give you $ 1,235 per month.
8) Inquire with property managers
A definite way to determine the right amount of rent to charge for your units is to enlist the services of competent property managers. Property managers are conversant with the various neighborhoods. As such, they know what amount of rent is ideal for which type of asset in each locality. Besides helping you determine the right rental price to charge, a competent property manager can contribute to a growing and flourishing your real estate investment. If you’re looking for a property manager, you can contact us and we would be happy to answer any questions you may have.