Rent often determines how quickly a new tenant moves into a vacant apartment or rental property – or how fast they move out. Thus, it’s important to set the right rental price. The following rental tips will help attract new lessees and keep existing ones.
Rental prices depend on LOCATION
A property’s location affects its desirability and the amount that can be charged for renting the space. Properties close to commercial or business districts command better prices, for example. The quality of neighboring buildings or properties also affects rental rates. So does its proximity to nature and the kind of views it provides tenants.
Rental prices depend on THE PROPERTY ITSELF
The features of the actual property are another factor. How big is the area? How many rooms does it have? What are its amenities? Does it come furnished? Design, age, compliance with modern environmental standards, and energy efficiency, are other factors that determine rent.
Rental prices depend on the COST OF OWNERSHIP
It’s as important to factor in the costs related to ownership and upkeep. These include regular mortgage payments, property taxes, maintenance costs, and property insurance. It also pays to factor in the possibility of unexpected expenditures such as major emergency repairs due to natural disasters.
Property management is an issue for owners who don’t have the time or who own several properties in different locations. If not properly managed, the property is bound to result in a high turnover of tenants, which isn’t good for the bottom line. In such cases, it is advisable to have professionals manage the properties. The cost of their service will be worth the benefits of maintaining the value of a property and ensuring that tenants are satisfied enough to keep renewing their leases.
Rental prices depend on MARKET DEMAND
Since rental prices are also affected by market demand, it’s wise to keep up to date with needs of an area and adjust the rates accordingly.
Quick rules of thumb
- Set rental prices by comparing the rates of other property owners in the area. Look for similar properties in terms of construction, floor or lot area, conveniences, and amenities.
- Apply the One Percent Rule (1% Rule), which states that in order to make a profit, rent should roughly equal 1% of the property’s market value or purchase price.
- Determine the median income of would-be tenants. Typically, a lessee’s monthly income is twice that of their monthly rent. Thus, a property can be leased at a monthly rate of half the median income of residents in a given area.
It is best to set the rent based on the target market’s capability to pay and to worry less about immediately getting a return on one’s investment. This is because the rental industry often pays off in the long run and the value of real property as an asset often increases over time.
Managing your rental properties in Ogden, UT need not be difficult. A team of experienced local Realtors at Destination Properties is ready to assist you. Connect with us today! Call 801.745.2009 or send an email to info(at)destinationproperties(dotted)com.