Setting Rental Prices

If you are a property management company, condo property management company, retail property management company, or industrial property management company you are probably all too aware that setting a rental price can be tricky.  Setting rental income is vital for any property management company or landlord, so getting the price right is key.  If you don't charge enough or charge too much you could find yourself in a heap of trouble.  Mechanisms needs to be put in place to bring in the right amount of money each month to keep your property management company or business afloat.  When all is properly balanced, you can expect to achieve a great return on investment.  Before setting your rental's price, consider the following:

Look to the local market

For a property manager or landlord to successfully set a rental's price, he or she must have knowledge of the local market and perform solid research on the last 15-20 most recently rented comparables.  Nothing takes the place of thorough research using current market data.  Make sure you consider the following:

-Current rents being charged for similar properties in the area:  Say your rental property is a two-story townhome with 2 bedrooms and 2 baths, then look for similar properties in your rental's area that match up to your rental.  See where they are priced at and that will give you a good range of what to charge tenants for your rental property.

-The shape that your rental property is in:  You cannot expect to charge a fortune for a rental property if it is not in excellent condition, so price needs to take into account the shape the property is in.  Look at your recently rented comparable properties and most specifically look at properties that are in similar condition to your rental.  See where they are priced at and that may give you a good ballpark figure for your rental property.

-Current rental demand in the area:  What is the current rental demand in the area your rental property is in?  If there is high demand and your rental is in a great area, that will allow you to charge more for your rental.  If the demand is low you will have to adjust the price accordingly.

-How desirable the rental's neighborhood is:  Is your rental property in an extremely desirable neighborhood or just the opposite?  The more desirable the area, the more you can charge for your rental.   

What will be included in your rental's price? 

What will be included in your rental's price is somewhat of a personal choice.  Some tenants or property managers may prefer that electricity, internet, water and gas be included in the rent and others may prefer to keep that separate.  If you are looking for a great competitive edge, you may want to consider including these items in your rental's cost.  However, leaving those things out may save you in case your tenant uses those items excessively.  This way you would not have to directly pay for them.  It is certainly something to think about.

Looking for more tips on setting rental property prices?  Feel free to leave us a comment or contact us.