Are you looking to rent out your home for the first time? Or, are you looking to fill a vacancy left by a tenant?
If you are, there is one important thing you’ll want to seriously consider prior to listing your home: the rental price.
How much rent you charge for your property can make or break your investment. If you charge the right rent, not only will you attract the right tenant, but you’ll also be able to maximize on your ROI.
The opposite is true if you charge the wrong amount!
So, how exactly do you ensure you charge tenants the right rent?
In this post, we are outlining everything you need to know about pricing your Temecula home.
1. Look at the competition.
This is the first thing you should do when determining how much rent is appropriate for your rental property. And when doing so, don’t forget to look at comparable properties that have similar features as yours.
When doing the comparative market analysis, focus on properties that:
- Are located in the same town as yours. And even better, focus on properties located in the same section or neighborhoods as your property. That’s because prices can fluctuate depending on the desirability of a section of a town.
- Are of the same size as yours. If your property is a one-bedroom, one-bathroom home, then compare it with other one-bedroom, one-bathroom homes.
- Have similar amenities as yours. Besides number of rooms and amount of square footage, amenities can also affect rental prices.
And, you may be wondering: where exactly should I go to look for comparables?
Generally, you can do this in three ways:
- One way is by looking at online ads. A quick search on Google for a comparable property will lead you to sites like Zillow, HotPads and Trulia. Note how they are priced and the average time they take to rent out.
- Another way to search for comparables is by checking similar properties in person. Interview the various landlords and note whether there is a high demand for rentals in the area.
- You can also seek professional help from a property management company. Property managers have insider knowledge on how best to price a property for quick turnaround. They will provide you expert advice on how much rent to charge and on how to attract a quality tenant for maximum ROI.
If you’re looking for a property management company, contact Realevate Specialists!
2. Factor in the amenities.
The more desirable a unit is, the more rent you can charge for it.
The following are some of the most desirable amenities prospective tenants look for when house hunting.
- A good view. Is your property surrounded by vineyards and rolling hills, with mountains rising in the distance? If so, you’ll be able to ask more than if your property has a view of the parking lot.
- Recent updates. Have you recently updated your property? For example, have you swapped outdated appliances with new and efficient ones? If you have, prospects will find your unit more desirable and will be more willing to pay more to live there.
- Square footage. A home of 1,000 square feet will be more desirable than a home of 700 square feet.
Other features that will impact the rental price include the property’s layout, floor level, and storage areas.
3. Factor in the expenses.
Everyone has a different goal when it comes to property ownership. But no matter your goal, the right rent should be able to cover all your expenses.
Some of the expenses of running a rental property include:
- Vacancy costs
- Property taxes
- Maintenance and repairs
- Mortgage payments
In general, though, expect that a property’s operating expenses to be roughly 50% of its gross income.
4. Examine the market demand.
Examine the market demand by assessing the inquiries you receive after listing the property. Normally, if you’ve done everything right, prospects will start making inquiries about the property right after the ad goes live.
However, if there is little to no calls, then your rental price may be to blame.
Overcharging your rental will only make prospective tenants stay away – especially if your unit doesn’t have the amenities nor the location to back the high price tag.
In such a case, your best bet would be to lower the rental price to a more appropriate level. After all, setting a rental price is never a one-time event. You should always adjust the price to match the market demand.
For instance, when the economy slumps, the demand for rentals can increase. This is because a bad economy means that people can no longer afford to buy homes and renting becomes more favorable.
A poorly performing economy can also cause people to downsize, increasing demand for smaller, cheaper rental units.
Also, different seasons usually have an impact on the demand for rentals. During summer, for instance, demand for larger units usually goes up. That’s because families tend to move before the beginning of the new school year.
As a general rule of thumb, the right rent is one that matches the prevailing market demand: Charge higher when there is demand for rentals, and charge lower when demand slumps.
There you have it – 4 tips on how to price your Temecula rental property.
Does this feel overwhelming? We recommend hiring an expert. Realevate Specialists provides property management services throughout Temecula and San Diego.
As a comprehensive property management company, we can help you in more ways than just pricing your home. We can help you market it, screen prospects, collect rent, maintain it, and more! We’re backed by over 30 years of experience.
You can get in touch with us by dialing (951) 461-0100. With our comprehensive suite of services, you’ll never need to worry about managing your rentals on your own!
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