Rentals.com Company Blog

Just for Property Managers, Manager News

By Steven

When you’re ready to set the price for your rental home, there are a number of things to keep in mind. Below, we’ve assembled the most important factors on which you should base your rental price.

Location
Just as it’s true in buying or selling a home, location is also key in renting a home. Is your house near a university, shopping district, metro station or office park? If so, its marketability just went up. On the other hand, if your home is in a less ideal neighborhood, either because of crime or distance from services, you will need to set your rent accordingly.

Value
It’s wonderful when the house you rent out pays for its own mortgage, taxes, insurance and maintenance and nets some profit, but don’t insist on it, or you may have a vacant property. If it’s been a while since you’ve had your house appraised, you should consider doing it now. Knowing what your house is worth will give you a good starting point from which to set your rent, as long as you keep the realities of the local market in mind. If you purchased the home for more than you could currently sell it for, or if competition is stiff for renters in your area, you might have to adjust your rental expectations.
That said, try to get the highest rate of return on your property as possible. If you’re interested in selling the house to another investor in the future, they will want to know that it’s a profitable one.

Area rents
While ideally you want to cover the costs of home ownership with your rent, you also need to be competitive. See what houses similar to yours are renting for. Be sure to check houses with equivalent features — square footage, the number of bedrooms, bathrooms, etc.
If there are houses on your street for rent, you might contact the landlords to see what they charge. Ask friends and family who might have rental property for their experience and speak with a local real estate agent for their expertise. Don’t be shy! There are probably plenty of people in your life willing to share their thoughts on the rental price for your home.

Setting a price
Once you feel you’ve determined an ideal rent for your property, list it for a little bit higher. If you aren’t drawing the attention you want or prospective tenants are declining because of the price, try dropping the rent until you get a bite. But be sure to reevaluate the rent each time the tenant’s lease expires. If the area has gone up in desirability, it might be time to consider a rent increase.