Ideally, the right rent price for your rental property would be a price that would allow you to bring in the most profit. Unfortunately, the process of setting rent prices is a bit more complicated than that. Ultimately, you must ensure you set the rent at the highest price that will allow you to attract tenants while covering expenses and still have some money left over. At the same time, you must ensure that the price you set is not so high that it will result in vacancies and the costs associated with an empty unit.
First, it should be kept in mind that the right rent price is based your unit's desirability. It is a mistake to set the same price for all units simply because they are the same size. This strategy only works effectively if the units are identical. If one two-bedroom unit has more amenities than the other unit, then the rental price should naturally be higher for that unit. Amenities that are worth charging more for include a unit with a view, more square footage, a more desirable layout, updates, floor level, and additional storage space.
The amount of competition that you face in the area should also be considered. Take the time to review ads for rental units in your area to get an idea for the going rent. After tracking rental prices for a couple of weeks, you should be able to recognize which units rent quickly. It is also important to evaluate whether property owners in your area are offering incentives to tenants. Such incentives might include free cable, etc. This can often be an indication that the market is oversaturated and you may need to lower your asking rent.
Consider the amount of interest that you receive in the property. If tenants are not coming to view the property, the problem could be the rent price. If the asking rent is too high or too low, it can often prospective tenants away. Keep in mind that if the rental price is too low for the neighborhood, some tenants will steer clear because they think there may be something wrong with the unit. The key is to find the ideal price point.
It should also be kept in mind that rental prices often must be adjusted to meet demand and changing market dynamics. Along with economic factors, the local housing market can also often affect demand, which in turn can have an effect on rental prices. In most instances, the greater the demand for your unit, the more rent it can command. When there is less demand, the lower the rent will need to be to attract tenants.
While generating a profit is always important when setting a rent price, a variety of factors must be considered to find the right price point. Once you have found the right price point, remember that using a tenant screening service such as VerticalRent can make it much easier to find the right tenant.