At Carolinas Metro Realty, we get calls all the time from investors wanting to know how to set a price for their rental properties. There are a couple of things worth highlighting.
You definitely need to know your market. It’s important to know the neighborhood, the surroundings, what kind of shopping is available and how close the interstate is. It will help you price your property to know if you’re listing a home in a saturated market, so pull some data from the Multiple Listing Service (MLS) or Realtor.com. This will give you a good idea of what kind of rents are to be found in the area. You want to know how much people are paying per square foot. Always look at any additions and repairs that have been made to your house and keep in mind that those improvements can add value to your property in the rental market.
Knowledge is the key. Once you know the market, you’ll have a better idea of how to price your rental home. Once it’s priced right, you will be able to schedule showings and get feedback on the property so you’ll know whether you’re in the right range. It’s critical to get the price right from the beginning.
Avoid pricing your property too high. When you do that, it will sit on the market longer and get stale. All the agents will have seen it already and you won’t have much luck renting it out quickly. You don’t want to price the home too low either, or you’ll decrease your profit margin. You want and need to put just the right price on your house.
It’s also important to understand who your clientele is. Identify whether your property will attract high end renters, tenants on the lower end or people who fall somewhere in between. This will make a difference in how you advertise and market your rental home. For example, if you have an investment property that will be suitable for renters on the lower end of the market, Section 8 is a possibility. In those cases, you’ll need to understand the process that’s involved. There will be strict inspections and you’ll have to make certain required repairs.
Understand your market, know your clientele and keep your eye on vacancy rates. When you get the price right from the beginning and your house makes a good first impression, you have a great chance of renting it out right away.