Determining what rental rate you should set for your multifamily housing properties can be a challenge. As a landlord, you want your rental property business to succeed, but you also want to be fair to tenants – and not price them out. To find the right rental rate for your units, consider these factors.
6 Factors That Influence Your Rental Rate
Where your rental property is located can influence how much prospective tenants are willing to pay for it. Dwellings that are close to many amenities, like restaurants, shopping, workplaces, good schools, public transportation, and medical care, for instance, can generally command higher rates than properties in rural areas or in locations with high crime rates. Assess how convenient and safe your property’s location is, making note of the pros and cons.
Property Size & Condition
Of course, your rental property’s actual size and condition will also influence your rental rates. New construction, recent remodels, or very well-maintained properties can typically rent for higher amounts compared to ones that are outdated or in need of a little TLC. Similarly, tenants will pay more for larger properties. When determining your property’s size, take into account total square footage, number of bedrooms and bathrooms, and yard size.
Does your rental property have extra features that tenants will enjoy? Those may help bump up the rental rate you can charge. Take stock of bonus features like a fenced-in yard, garage, smart home capabilities, security system, pool, or furnishings. If utilities are included in rent, tenants might be willing to pay more for the property, too.
The current state of the market in your area is one of the most influential factors affecting rental rates. Is your property in a high-income neighborhood where rental rates are higher than average? Is there more demand for rental properties than there are rental properties available? Aspects like these might open the door for higher rent. Research rental properties of a similar size, condition, and location to your property to get a sense of the market and what might be a reasonable rate to charge.
The general economic landscape should also be taken into account when deciding what you will charge for rent. Times of high inflation and rising interest rates mean that prices are likely to rise across the board – for you and your tenants. Your rental rate will need to support rising operational costs for your rental property business. However, it shouldn’t be so high that you struggle to find tenants who can afford to pay it. Remember: Their budgets are likely feeling the squeeze of inflation, too. Alternatively, thriving economic conditions may mean you have more wiggle room in the rent you charge.
Government regulations, like rent control legislation, can also impact the rent you and other landlords can charge for your properties. If laws are in place that limit how much rent can be raised in the future, you want to ensure you aren’t undercharging for your rental property. Additionally, regulations affecting short-term rentals like Airbnb can affect the supply and demand for rental properties in your area – and, consequently, rental rates.
Get It Right With Millers Mutual
When setting rental rates for your properties, try to be judicious, compassionate, and logical. Balance the needs of your rental property business with what tenants are able and willing to pay.
The right precautions can also help keep your rental property business’s finances healthy. A comprehensive Businessowners Policy, like the one offered by Millers Mutual, can minimize the financial impact of unexpected losses or events, and thorough tenant screenings can help ensure you’re renting to responsible tenants who can be relied upon to pay their rent in full and on time.
Let us connect you with the products and services that can help your rental property business thrive. To get started, find a Millers agent.