|How To Set Fair Rental Prices
As a property manager, one of your many duties is to set what you think are fair rental prices for the property that you are managing. Of course, the owners have the final say so, but it’s up to you to bring them a range of numbers so that they can have the right information to make such a decision.
So what is a fair rental price?
It’s honestly hard to tell, especially since you’re not a professional property appraiser, who will know what to look for to set rental prices as accurately as possible. But you’ll definitely have to think like one if you don’t want to over price or under sell the property. The best advise is to not go too overboard, setting the price way too high or way too low, since extremes are never safe and a bad idea. And to better help you set a fair rental price, here are some helpful tips to take into account when setting up the price:
- The 1% rule
This rule is an economic theory that says rent should fall between 0.8% and 1.1% of what the property’s market value is. So if it’s a cheap property, charge the minimum range, but be brave and charge higher for properties that are valued higher.
- Factors that affect the rent price
There are a few more factors to consider when setting rental prices other than location, size and amenities. In order to set a fair market price, you’ll have to really consider both major and minor factors that can help you set the right price. Major factors include location and size, making properties in urban spaces more expensive than those in the suburbs, while bigger spaces garner higher rents. But also consider lease terms, which means it’s fine to adjust rental price depending on any custom offers any prospective tenants make in regards to their lease. Also take into account median income of residents in the area and market trends, which are all considered major factors.
- Don’t forget about the minor factors
Minor factors to consider when deciding on a price include if the place will be furnished or unfurnished, has beautifully landscaped exterior, they type of garage or parking, how many units the property has, any amenities like a gym or pool, storage options and if any utilities will be included in the rental price.