Pinpointing the correct rent amount to charge tenants can be tricky business for a new landlord. Set the the rent too high and you risk sitting on a vacant property until you adjust your price. Set the rent too low and you lose out on money you could be getting. There are a few ways to set a rental rate for a house, however, the best way to find your home's rental value is to compare it to similar rentals in your area. Also, ready and willing renters ultimately determine the rental price of homes.
Free Online Rent Estimators
Websites such as Rentometer and Zillow offer tools you can use as starting points for your rent price. Online rent estimate tools use property information found in the public records and compare it with the rent prices of similar homes for rent. These tools can only access limited data, such as location, square footage and the number of bedrooms in a home, but don't consider market rental conditions. Furthermore, public records may not account for all of a home's desirable and undesirable features, such as property upgrades or proximity to a noisy freeway. As such, the estimate may differ from the actual amount a renter will pay for your house.
Appraisal for Rental Comparables
For a fee, an appraiser can visit your home, evaluate its condition and features, and compare it with rentals in your area. An appraiser's report provides a more accurate rent price than running your own comparisons via the Internet because appraisers also consider current market conditions, or rental demand, in your area. Also, an appraiser offers an independent, unbiased opinion, as opposed to your own perceptions about what the rental rate should be. At the appraisal inspection, provide the appraiser with a list of upgrades and features he might otherwise not know about to ensure the most accurate estimate. The fee for a comparable rental survey is about $100 to $150 and may vary by appraiser and property size.
Ask Property Managers or Real Estate Agents
A local real estate agent can help you set your home's rental price, as agents have access to more precise property data via their local Multiple Listing Service, or MLS. You generally don't have to pay an agent for this service, as most are willing to do this homework for past clients or to earn points with homeowners for their future business and referrals. If you plan to use a local property management company, you can ask them for their professional opinion of what your home can rent for. As experts in your rental market, they should be more than willing to provide a figure after reviewing your home's information.
Factors That May Affect Pricing
Some landlords would give an arm and a leg, let alone a few hundred dollars to secure a solid tenant for the next two years. Renters may want to negotiate a lower rent if they have excellent credentials, can commit to a multiple-year lease, can make a larger security deposit, or can maintain the landscaping and save you money on a gardener. Conversely, renters may be willing to shell out a bit more money each month for the privilege of having a pet on the premises, a furnished property, all utilities included, or for a washer and dryer in the home. When negotiating the rent price, use discernment and crunch the numbers to determine how much to give and take.
- Photo Credit monkeybusinessimages/iStock/Getty Images