If you’re new to property management or you’re entering a new market as a real estate investor, setting rent rates might feel overwhelming. Fortunately, it’s a data-driven process that really shouldn’t require any guesswork at all. Here are some tips to help you determine how much to charge for rent in Franklin County.
How to Set Rent Rates on an Investment Property
Finding the magic rent number for your investment property starts by doing a market rental analysis of comparable properties in the area. Once you know how much neighboring units with similar features are renting for, you can come up with a price that makes sense for your property given what you know about the current market conditions.
Setting the market rent on a vacancy is a little more straightforward than it is when setting rates on a renewal because you have the marketplace for guidance – all the listed units are the supply, and all the people looking for places to stay are the demand.
But What if Your Property isn’t Renting?
You’ve determined your magic rent number. That’s great, but what if your property is still sitting vacant? What should you do?
First, a vacancy should not immediately be cause for concern. Depending on your market, it’s normal to experience a 6-8 percent vacancy rate on a given property. If, however, you feel like you’re beginning to cross that threshold, it may be time to reevaluate what you’re charging for rent. It can also be a good time to seek advice from other property managers familiar with the local market.
A Word to the Wise When Setting Rent Rates
Setting your asking rent at a fair market price or even slightly below will help get you the high-quality applicants you’re looking for. Let us elaborate.
While you may think that if you set your rates high, you’ll get “good” tenants. The reality is – that’s generally not the case.
Discerning, high-quality tenants are going to pay the absolute minimum rent for a high-quality space that fits their budget and needs. They’re shopping around, they’re getting to know the market, and they have no intention of paying more for a property when they can get a similar one for less down the block.
Conversely, the people who are willing to pay more can become bad tenants. These are the people who may have a criminal history or an eviction on their record, and 90 percent of landlords won’t rent to them at all. They may be willing to pay almost whatever it takes just to sign a lease and be done with it. It’s nearly certain that if you’re asking way above market rate, you risk only getting bad applications.
Setting your rent rates fairly and in line with market conditions improves your likelihood of securing quality tenants who are more likely to stick around because they trust that they’re paying a fair price.
If you have questions about rental rates in 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.
