Rental income is an important part of your overall investment strategy. No one rents out a property in order to earn as little as possible. When you’re deciding how much rent to charge, you need to balance your competition, the market demands, and the willingness of tenants to pay what you want for your property.
How Much Should I Charge for Rent?
The first mistake that many landlords make is to settle on a rental price based on your own expenses and desired cash flow. You want to earn enough every month to cover your own mortgage payment as well as your tax bill, insurance costs, and maintenance needs. However, it’s the market that will dictate how much to charge for rent. You cannot decide on your own how much you’d like to earn every month. So, take a look at what houses similar to yours are renting for. Find out how long they are on the market before they rent at that price, and settle on a price that’s well within the range, but also competitive.
What Should I Charge for Rent to Attract Tenants?
You need to balance your desire to earn as much rent every month as possible with your need to get a good tenant
in place quickly. If your property is vacant on the market for an extra month or two, you’re going to lose a lot more money than you would if you simply lowered your price by $50 or $100. If most of the properties just like yours in your neighborhood are renting for $1,100, you might want to consider listing yours at $1095 or $1050. That will get the attention of tenants, and you won’t have to compete for another month to get someone in place.
Remain Flexible with Pricing
You’ll know if your property is priced too high, because you won’t get a lot of interest once you’ve listed it. If people aren’t interested in
seeing it, or they see it but then they decide that it’s not worth the price you’re asking, you should be willing to lower the price. That will ensure you aren’t waiting too long for a tenant or settling for a less than qualified tenant who is desperate to find a home and is willing to pay more.