Fair market rents (FMRs) in the government sense of the word are calculated by the U.S. Department of Housing and Urban Development (HUD) and are defined as the 40th percentile of gross rents for regular, standard-quality units in a local housing market.
Though used primarily for government-assistance housing programs, it’s important for all investors to be aware of their property’s FMR. As you know, accurately pricing your rental property is key to securing high-quality tenants and maximizing your property’s NOI .
The best place to start when determining your rental rates is to look at market data.
Using Data to Calculate Market Rent for Your Columbus Property
Data is your friend when it comes to setting fair and accurate rent rates for your single-family home, duplex or other multifamily property in Central Ohio.
First, take a look at HUD’s website to establish a benchmark for FMRs in your area. For example, here in Franklin County, 2023 FMRs for a one-bedroom unit is $941 (that’s up from $829 in 2022).
Next, you’ll want to look very closely at your given neighborhood and do some further assessments and calculations.
- Find at least 3 comparable properties in your neighborhood. They should have the same number of bedrooms and bathrooms and have nearly the same square footage.
- Calculate the average rent for these comparable properties. Keep in mind that if these units are sitting vacant, these are rates that are not being rented. This could be a sign that they could be priced too high.
- Lastly, consider unique factors that affect your property – Has your unit been recently renovated or offer an enviable view? Things like the property’s condition and its amenities will allow you to adjust rent up or down as appropriate.
Accurately pricing your rental property requires you to do some homework, and it starts by looking at fair market rents for your area. Once armed with data, you can then make strategic decisions that will help you secure the best tenants, reduce vacancy and increase your net operating income.
If you have questions about the Columbus market, we’re here to help. Get in touch with us at RL Property Management anytime to learn more about owning or managing single-family and multi-family rental properties in Franklin County.
