Today we’re talking about how to determine a fair price for your rental property. One disclaimer: renting to just anyone is not a good idea. Even if someone promises you more than what you were going to rent it for, or they want to pre-pay their rent 12 months in advance, you still want to make sure you have a quality tenant. No prepaid rent or higher amount is worth having a property that’s damaged. Evicting tenants will be time consuming and expensive, so regardless of the price you attach to the home, make sure you do your tenant screening and get a high quality tenant in your home.
Pricing and Vacancy
A property that is listed with a price that’s too high will result in a long vacancy. Whether you listed your property on the Internet or there’s just a sign in the yard, if you aren’t getting phone calls within the first seven days, you know something is wrong. More than likely, the home is overpriced. When you overprice by $100 or $200, the property will remain vacant for two or three months and you’ll lose whatever profit you were hoping to gain with that price anyway.
Instead of putting any price that you’re hoping to get on your property, you want to collect data to determine the proper price and get it rented quickly. This is where it’s an advantage to work with a professional property manager. We have real data at our disposal to determine the right price. Our rental portfolio of the properties we manage will tell us what homes in your area are renting for. That sampling will give you a gauge for what the market will pay. You can find out what the average price is for a two bedroom, three bedroom, a townhouse, a condo or even a large estate. A property manager has access to information that will demonstrate how to price your home.
As an independent landlord, you may not have access to that information. You can go to larger real estate websites that provide value estimates. Those are close, but not entirely accurate. Remember that even a $25 or $50 dollar difference will change how quickly you get the home rented.
If you have any questions, or you need help pricing your own rental property, please contact us at Wolfgang Property Management, and we’d be glad to offer assistance.