Learn How Much You Can Rent Your Property For!
I remember buying baseball and basketball cards as a child. It was exciting to open a random pack and see if you were lucky enough to score a rare card. Then you could race down to the local store that sold collectables like comics and sports cards but most importantly they sold the price guide. The price guide came out every month and it was exciting to see if a card you had went up in value each time. Thinking back on it now it seems like an improper introduction to gambling and the market speculation for a child. Unfortunately, there are no price guides to refer to each month to know what the rent should be.
New landlords with one property often say “well my mortgage is ….. and my taxes are…. and .. and…… so I need to charge $xxx for rent. If you are a new landlord thinking about rent rates, you can get all those numbers together, write down the amount for each, add it up and then………. Throw it away! Your expenses have exactly zero to do with what your property is worth as a rental. Now that we are throwing things away we can go back and throw away those sports card and comic book price guides also. I don’t know about you but I remember it was near impossible to actually cash in your cards or comics for the price listed in those guides. The reason for this is that you can never get the real value of something in a book, a guide or on a website. The only way to actually know what something is worth is to sell it. Those old baseball cards just like your rental property are worth EXACTLY and ONLY what someone is willing to pay you for them at this very moment.
Value you provide
It is helpful to think about value in a specific moment so you can make an effort to receive the maximum value. You are looking to achieve the highest rent at the same time potential tenants are looking to obtain the best property for the lowest price. This means you are competing with all the other available properties at the time you have a vacancy, so you want to take steps to provide a better value than most of the market when you are searching for a tenant. Is it hard to find a place that allows pets in your area? You may want to allow animals to widen your potential tenant pool. Do you provide laundry? Utilities, parking etc? Think of providing novelty amenities that don’t require large expenses. Maybe you have smart light switches or accent lighting, stainless appliances. If you want a higher rent than most other landlords your property needs to be perceived as better than most by your customers, tenants.
Value you receive
We stated before that the only way to know the value of your property is to rent it but there is a way to narrow in on the likely range. If you advertise effectively you will know based upon the number of inquiries to you get. We suggest reviewing your competition and finding a range of advertised prices for similar properties then you can list yours at the top of the range. If there are no inquiries over a few days or a weekend you now know that you are too high and you can lower it quickly until the phone starts ringing. This strategy gives you a chance at top dollar but adjusts quickly to fill the unit and minimize the duration of your vacancy. A good property manager will give you comparable properties that they have rented recently and tips to capture the highest possible rent in the shortest amount of time.
Nick D'Agnillo is the CEO & Founder of Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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