Setting The Right Rent: There is a Formula

Setting The Right Rent: There is a Formula

Setting The Right Rent

Landlords deal with many issues such as property upkeep and taxes, mortgage payments and renters who do not abide by the lease agreements. Concern about setting the right rent should not be a problem though; there is a formula to determine what rent to charge on your property.

 

The rent rate is tied to the value of the house or apartment. Experts recommend charging from .8% to 1.1 % of the value. That means for a $100,000 property, you  can start with a rent of $800 a month. The formula varies a little with very expensive homes; you might do well to use the lower percentage because the higher figure might decrease the number of renters who can afford the rent, and limit your choice of tenants.

 

The rent figured by the formula may be altered by what comparable properties rent for in the area where your property is located. You can ascertain this by checking newspaper ads for rentals and searching online rental listings. Your property manager or real estate agent will consider homes of the same size and age as yours. Look at homes with the same number of bathrooms and bedrooms. You can usually charge higher rent for homes with fenced yards, included appliances and amenities such as swimming pools and landscaping.

 

Remember, no matter what your mortgage is, rent is not figured upon what you owe to the bank. It is calculated upon what the renter is willing to pay, and your property manager or real estate agent will help navigate this journey. Of course, if utilities and lawn care are included with the property, you can add that to the rent. You don’t want to lose money on a rental property.

 

To decide whether to use percentages on the high or lower end of the rent scale, try running a newspaper ad with the high figure first. If you get few responses, lower the amount and run the ad again.

 

Contact us for more tips on setting the right rent, or for the peace of mind that comes with professional property management.

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