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How much rent can I charge?

Setting rentPricing your rental house is one of the more important tasks you’ll face as a landlord. Getting top dollar for your rental is important when it comes to meeting your financial goals for the property; however, if you set the rent too high, you’ll likely have to weather longer-than-average vacancies—and you may also face high turnover rates as renters seek more budget-friendly options.

Many first-time landlords choose to consult with a property manager when it comes to determining how much rent to charge, as professional property managers often have deep insight into specific rental markets and know how a given rental house stacks up compared to others with similar features. Whether you use a professional rental agent or go the DIY route, you’ll need to know how to compare your property to others on the market in order to set the right price.

Here are some things to be sure to take into account when determining how much rent to charge.

Location and nearby amenities
For obvious reasons, the location of your rental house is one of the main determining factors in how much rent you can charge. The more sought-after the neighborhood where your rental is located, the more rent you can charge. While every desirable neighborhood has a unique mix of characteristics that make it a prime location, here are a few things that great neighborhoods tend to have:

  • Close proximity to employment
  • Good schools
  • Nearby shopping and restaurants
  • Ample parks or green space
  • Nicely maintained houses and landscaping
  • Overall charm

Main features
When pricing your rental, the first things to look at are the most basic aspects of the property such as:

  • Bedrooms and bathrooms: The number of bedrooms and bathrooms your rental has fundamentally affects how many people it can accommodate and how comfortable they will be.
  • Size and shape of the property: There can be vast differences between properties with the same number of bedrooms and bathrooms. A 900-square-foot two-bedroom, two-bath cottage is not the same as a 1500-square-foot house with additional basement storage space. Likewise, the attractiveness and practicality of your rental’s floor plan will come into play when it comes to how much rent you can charge.
  • Overall condition of the home: The closer your rental is to new condition, the more you can charge.

Finish levels
The relative level of luxury your unit offers will also impact the amount of rent you can charge. Most renters expect “standard” rental units to be well-kept, with reasonably up-to-date—if basic—interior finishes. If your rental house features tiles and cabinetry from the 1960s, you’ll probably need to charge a bit less than the average going rate for a comparable space. On the flip side, if your home is full of trendy upgrades, you may be able to command a higher than average rent price.

Here are some features that may allow you to charge premium rent, especially if you offer four or five of these items.

  • Wood and/or tile floors
  • Attractive cabinetry
  • Granite counter tops
  • New appliances
  • Dishwasher and garbage disposal
  • In-unit laundry
  • Spacious closets
  • High ceilings
  • Energy efficient windows

Professional management
Keep in mind that using a property management company is not only a major convenience for you, the rental owner—it adds significant peace of mind for your tenants, as well.  Renters are likely to pay more when they know that any issues that arise will be dealt with promptly and fairly by a dedicated professional manager.

| April 13, 2012 More