Setting accurate rent rates is essential to the profitability of your investment and key to attracting and retaining high-quality tenants. If you charge too much for rent, you could end up with extended vacancies or, perhaps worse, bad tenants. Charge too little and you risk leaving potential cash on the table.
As you crunch the numbers and consider other intangibles that may affect what you charge for rent, keep these factors in mind.
- The area’s fair market rent (FMR) – Understanding baseline rent rates for metro or county areas gives you a starting point for setting your own property’s rent.
- The type of tenants you want to attract – You should only be interested in renting to high-quality tenants. This is the type of resident who is more likely to take good care of your property as well as renew their lease when the time comes. But good tenants are discerning and have done their homework. They certainly don’t want to be overcharged. Keep this in mind as you establish your rent rates.
- Your comfort with vacancies – Sourcing good tenants can take time, and during any vacancy, it’s the property owner who’s stuck with paying the mortgage and all other expenses. Stay the course during turnovers, and when in doubt about your rent rates, ask a local property management company for help.
- Competition – Supply and demand reign supreme in the rental market. If units in your area face increased competition, you should be able to adjust your rent accordingly.
- Amenities and condition – Sought-after amenities and units that have recently undergone upgrades stand a better chance of securing higher rents than those in poorer condition.
Setting rent rates for investment properties starts by looking at the data as well as considering your own strategic goals for the property. To best understand the local market conditions here in the greater Columbus, Ohio area, come talk to us at RL Property Management.