How to Set Your Real Estate Rental Rates
Formulating a rental price for your unit can be challenging. You don’t want to price too low obviously, but you don’t want to price the unit too high and end up not securing a tenant.
To understand what the market rent in your the area will bear, it is important to look at rental ads in local newspapers such as Craig’s List or Kijiji to research the fair market value rents for your area. Look for ads which are advertizing similar sized units with similar features and amenities.
Most tenants look for convenience when searching for a rental property by looking for a place that is near their work or close to their children’s school, so consider location and amenities when determining rental rates. For example, a three-bedroom unit in one end of town may rent for more than in another part of town based on location and amenities.
It is important to keep in mind that there is a point when rental rates can reach a cap. When interest rates are low and rental rates are high, tenants will quickly make the connection that it just doesn’t make sense to rent any longer and it can be less expensive to purchase a home. If this is the case, moving the tenants into a rent-to-own program may be a good strategy as it will keep the cash flow high and you have a built-in buyer.
To help keep your finger on the pulse of the market, join a landlord association in your local area. Any emerging trends will affect all landlords equally. Any upward or downward trend in the local economy could have an effect on your rental rates. Make sure you keep track of whether there have been job losses or new job creation in the local area.
Lastly, keep in mind what extras your property offers in terms of onsite washer/ dryer, AC, dishwasher, on street or driveway parking, garages etc. This will play into your rental rate determination.
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