Figuring out the sweet spot for apartment rental pricing can be challenging, but it doesn’t have to feel impossible. It’s important to find good pricing if you hope to rent out your units. Pricing either too high or two low can result in too few applicants, not enough income, or problematic tenants. Thankfully, there are a number of steps you can take to figure out how to properly price your rental property for the local market.
Research similar properties in your area.
This step seems obvious, but many people overlook it because they think they already know the ballpark rent for their local area. It’s always good to look at Zillow or Redfin for similar rentals in your own neighborhood or borough. Looking around your city as a whole might give you a skewed perspective, particularly if you’re in a major city. An apartment downtown is likely to have higher rental prices than a place further removed from the city center. Access to schools, amenities, and public transportation will also play a factor.
Check home prices if you’re renting a home.
If you’re renting out a single-family house or duplex, you may not have many other rentals for comparison in the immediate area. In that case, take a look at recent home sales to see what people are paying for nearby homes and use a mortgage calculator to get a ballpark figure of what the new owners are paying each month. As a rule of thumb, rental prices will not be as high as the cost of a mortgage. Figure out your property’s value and charge roughly 1% of that value as monthly rent, give or take based on other factors.
Location is everything.
As mentioned above, your property’s proximity to a tenant’s school, work, transportation, groceries, and entertainment can have an impact on the rent you can comfortably charge. People will be willing to pay a little more for a prime location but balk at a high rental cost for a unit that’s too far from the action.
Factor in amenities and upgrades, within reason.
Investing in renovations and upgrades can give you more wiggle room to increase rent by a reasonable amount. Access to a swimming pool, gym, playground, laundry room, or other amenities will increase the appeal of a unit. Certain designer upgrades like a chef’s kitchen or in-unit laundry space may be worth paying extra for. Be mindful not to go too high, however.
Consider whether or not you’ll allow pets.
Millions of tenants own pets and are specifically looking for rentals that allow them. In some areas, this may be considered a privilege worth paying “pet rent” for, which means you can add a small monthly addition to rent every month for pet owners. Some landlords choose to do this, while others prefer an upfront pet deposit. See what other landlords in your area are doing.
Think about your own expenses.
Setting rent low may be appealing when you want to bring in money quickly, but it can result in underqualified tenants who are inconsistent with rent. When you’re setting rental prices, you need to consider your own expenses and whether your income will cover your mortgage, insurance, repair costs, taxes, and any other fees for both your own home and your rental. Always rent smartly, not quickly.
These are our best tips for setting rent for your properties. If you have other questions, please let us know! We have many years of experience working with landlords and property managers. For help in selecting the right tenants for your properties, we recommend our RentalConnect. RentalConnect offers property owners and landlords a great alternative to the expense of full tenant screening. This service requires no on-site visit, sign-up, or membership fees, making it extra convenient. The $34.95 service fee is paid by the applicant. Available 24/7, RentalConnect is fast, easy, secure, and delivers reports needed to make an informed decision, including a credit report, a national criminal search, and a national eviction search.
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