One of the most difficult challenges for new landlords is setting the right monthly rental amount for their properties. How much to rent my house for? Don’t worry, here are several considerations in order find the sweet spot for rental prices.
Determine The Property’s Value
Everyone knows how much they paid for a property, but the actual value of that property can change over time as the economy shifts, the neighborhood evolves and other nearby areas develop. The first step in setting your rental price is to figure out how much the property is currently worth. Some online websites offer home value estimates, but a more reliable value would need to come from a professional home appraiser. An appraiser would visit and inspect the property and determine a value based on its condition as well as what other properties in the neighborhood have sold for in recent months.
Set Rent As Percentage of Value
Your rental amount is typically between 0.8 percent and 1.1 percent of a home’s value. For example, if your property is worth $100,000, the rental charge would probably fall between $800 and $1,100 per month. The general rule of thumb is that the higher the value of the property, the lower the percentage. This allows renters to be able to afford monthly payments.
Check Out The Competition
Once you establish a rental rate based on the value of the property, you’ll have to see if that is a comparable rate in your local area. If the area is desirable and rates are higher, you can raise your rates to match. However, if the area is more depressed, then you may not be able to attract a good renter to agree to your rate.
Value The Amenities
Think about what makes your property stand out from others. Apartments with a peaceful, pleasant view may be in greater demand than those that face a busy street. Updated appliances, decor, windows and floors can attract more tenants as well. Square footage, room layout, extra storage or garage space, and floor level are all factors that can be considered when setting a rental price.
Obviously, if you’re still carrying a loan on the property you are renting, the rental amount must cover the loan payment. However, don’t forget to add in projected repair costs, insurance, taxes, utilities, labor and other typical costs of ownership.