• How to Determine Rental Price for Your Investment Property

  • How to Determine Rental Price for Your Investment Property

    Determining a fair rent for your Greenville, SC rental property is not just about making more profit. When it comes to rental units, tenants have many choices, which means that you should make your investment property as attractive as possible. Setting the right rent will reflect the positive attributes of your rental property and attract high quality tenants. Here are some tips that will come in handy when determining the rental price of an investment property:

    Use Your Home’s Value

    Calculate 1.1% of Your Property’s Value

    This calculation will give you the proper monthly rate for your rental units. For instance, if your home is worth $100,000 you should calculate 1.1 percent of this, which is 1,100 dollars.

    Renting Your Investment Property

    Professional investors make use of this percentage when determining the price of their rental units.

    However, this calculation has its own limitations because it does not consider the factors that detract or add to a property’s value. For instance, if your rental property is in a high-income neighborhood, this calculation might give you a very high rental price.

    Consider the Market

    If your property is in a highly competitive market, using this formula will result in a higher rental price than the surrounding properties. To find the right price, you would have to compare your unit with others before settling on the final price.

    Research Rent for Units Similar to Yours

    You can visit sites such as Craigslist, Zillow, etc., to see the rental prices of nearby units. If the prices are not listed, you should consider driving around the neighborhood. Start by looking for units with the same square footage, amenities, and number of bedrooms as yours. Write down the rental properties that are similar to yours and how much rent they charge.

    Contact Property Managers

    If you are planning to hire a property management company such as Trinity Property Management, you need to have a good idea of how much rent you can charge. You should get in touch with property management experts if you want to know the rental prices. Because property managers know more about the local market, they will know how much rent to charge for your unit.

    Work with an Agent

    Property management experts and rental agents understand the rental market. Because they are also familiar with the properties in the area, they can assess the pros and cons of your property before setting the right price. Agents know what tenants want or do not want, meaning that they can set rental prices based on this information.

    Calculate Rent Amount per Square Foot

    If there are no similarly sized properties in your area, you can figure out the rent per square foot of units that are a bit similar. To calculate rent amount per square foot, you should divide the rent of a unit by its square footage. However, you should note that smaller properties have a higher price per square foot than larger ones.

    Understand Factors that Affect Rental Value

    Consider the Location

    Location is the most important factor to consider when determining rent. People might be willing to forego some amenities if a location is favorable. If your rental unit is near schools, it will be very valuable to people with young children. Students might also be willing to pay more for a unit that is near colleges.

    Consider the Amenities

    A renter might pay more for some comforts and conveniences. Desirable features usually command a higher rental price, including:

    Parking – renters will pay more for readily available parking in urban areas.

    Tennis courts and pools – such amenities make a rental unit more attractive and increase its value. Outdoor spaces such as decks also increase the rental value of a property.

    Laundry services – if your rental unit has laundry facilities inside it, renters will be willing to pay more for it.

    Consider the Property’s Desirability

    The layout and size of your unit will affect its value. High-end finishes and contemporary design elements also command a higher price. If you have an elevator in your unit, you can charge more for the units on higher levels. On the other hand, you should charge less if there is no elevator because tenants do not like climbing stairs.

    Adjust Rent Based on the Market

    In bad economic times, rental units have a high demand because people are unwilling to buy homes. You can increase your rental prices at such times to meet the demand. On the contrary, when the demand decreases, you have to lower the rental price of your units. If you rent your unit seasonally, you should charge higher rent in the peak season and lower it in the off-season.

    Being a property investor is not a walk in the park, as you will have many responsibilities. If you do not want the burden of determining rent, you should consider investing in property management.  Give Trinity Property Management a call at 864-534-3479 a call today and you’ll see how Greenville’s property management experts can help you with your investment property.