In the property management industry, starting from scratch is challenging, especially if you are trying to figure things out on your own. For starters, you might be wondering how much to charge for your new rental home. Industry experts rely on a few key factors for guidance. Here are some tips from property management experts on how to set your rental rate:
Consider the Property’s Worth
How much did you pay to acquire the property? For a quick estimate, you can charge 1% of this as the monthly rent. However, you may need to go lower at 0.8% if demand is low. You can also increase this to 1.1% or more if demand is high. This means that a $400,000 property can generally be rented out for $3,200 to $4,400 a month.
Check Current Regional Rental Values
How much do your neighbors charge? You have to consider the competition which are other rental homes in the area. Check out the listings online to see the rates for similar properties. Make sure to stick close to the average. If you feel that your property could go for a higher rental fee, then justify it by highlighting the property’s advantages over the others.
Study the Rent Control Laws in the State
Are there restrictions on rental rates? Some places will limit the amount that you can charge for rental units. They may also specify the conditions under which you can increase the fees. Make sure that you are aware of the frequency and increments allowed under the laws of the state. While you are at it, read up on other topics such as evictions and liabilities.
Calculate Cost of Repairs and Maintenance
You will typically want the rent to cover the loan payments, but that is only part of your monthly cost. You should also consider expenses such as repairs and maintenance. Things will inevitably break, so you need to have funds ready for plumbers, electricians, carpenters, roofers, and other skilled workers. You also should charge enough to buy the materials needed to fix the problems when needed.
Estimate the Cost of Utilities
Some people will let the tenants pay for the utilities on their own. Others might include cost of some or all the utilities in the rental fee. In this case, it is necessary to estimate the cost of the utilities for an average family throughout a year. Divide this by 12 and add the fixed amount to the monthly rate. There are tenants who prefer this arrangement since it simplifies their bills as they can pay once and take care of everything they need.
Be Mindful of Local Trends
Rental rates are not set in stone. Efficient rental property management can require a periodic assessment of local trends to see whether the current rates are still appropriate. If the population in the area is decreasing, then the figures may have to drop. If more people are moving in or if the area undergoes rapid development, then the rates can rise because of the higher demand and perceived value.
Specialized Property Management Atlanta knows how challenging it can be to keep up to date on the local market, laws, and trends, but because of our experience we know how to handle almost any situation. Let us help you take care of your rental property in the most efficient way. To get a quote or for more information, call us at 404-596-8429 or contact us online.
