How to Decide the Rate for a Rental House
Coming up with a good rental amount is a key land-lording issue. It would be nice if you could price it to make $500 in cash every month, but that's not always realistic. You have to find out what the market will bear, balancing how long you're willing to wait for a tenant who can afford to pay more in rent with how quickly you need to have the property rented to cover your costs.
Other People Are Reading
Instructions
-
-
1
Do market research. Look in the newspaper, call a property management company or call on For Rent signs to find out what houses near your property rent for.
-
2
Compare property value. You may find that houses in your area rent from $500 to $990. The houses with lower rents likely have fewer bedrooms and bathrooms, aren't in as nice condition, or lack amenities such as a fenced yard, garage or air conditioning. It could be that the houses in the higher rent range include utilities in the rental amount.
-
-
3
Determine where your house falls when compared to other properties. If you have more bedrooms, bathrooms and amenities, you can set your rental rate at the higher end. Be as objective as you can in this evaluation and try to think like a renter.
-
4
Choose your rate based on the costs you have on the house (mortgage, insurance, taxes and repairs), the condition of the property, how quickly you want the house rented (the lower the rent is, the more quickly you'll find a tenant), and what the market will bear.
-
1
Tips & Warnings
When doing market research, it may be helpful to make a spreadsheet with not only the rental amount but number of bedrooms, bathrooms and the amenities the house includes so that you don't have to rely on your memory when comparing your property against others.
Set a time to review the rent. In a year, you may be able to get more for the house and can raise your rent accordingly.
Ideally, your costs on the property should be covered by rent. If that's not possible, it's better to get a tenant in and have some of the costs covered rather than have the property sit on the market with no interest while you cover 100 percent of the costs.
Resources
- Photo Credit for rent image by PinkShot from Fotolia.com
