Becoming a landlord is an exciting time in your life. You can earn passive income and boost your retirement savings. However, being a property owner also comes with challenges. This is especially true right now.
Rent prices fell in 2022 on a year-over-year basis. One of the few times this has happened. In this environment, you might find it hard to determine how much to charge for a rental apartment.
So, where do you start? When looking at property pricing options, you should look at comparable units, available amenities, rental demand, and more.
The article below will help you figure out how to accurately price your rental property. Continue reading to learn more about this important step in your real estate investing journey.
Figure Out Your Mortgage and Tax Payments
The best place to start when pricing your rental property is to figure out how much you need to charge to break even.
If you have a $1000 monthly mortgage payment, plus $200 in property taxes, plus $100 in home maintenance, you'll need to charge at least $1300 for rent to break even.
Charging this much will ensure that you don't lose money every month. If you want to have positive cash flow, you'll have to charge more than that.
Look at Comparable Rental Properties
Once you've figured out how much you need to charge to break even, you can start looking around to see how much other property owners are charging. You can start by looking at rental property websites and trying to find properties that are similar to yours.
Look for properties with similar square footage, the same amount of bedrooms and bathrooms, and similar amenities such as a backyard, in-unit washer, and dryer, or walk-in closets. Try to find a handful of properties that match yours, then use their prices as a ballpark range for your property price.
Think About How You Want to Handle Deposits and Fees
You can be flexible with your property price if you're willing to be creative with deposits and fees.
For example, you can set the rental price higher than comparable properties but offer a lower deposit requirement. Alternatively, you can set the price lower but require that renters pay additional fees for property upkeep. Some property owners choose to pay the property utility fees to charge more for monthly rent.
Other property owners will ask tenants to pay for utilities and set the rent lower to attract more prospects. You'll have to try a few options to see which approach works best for your property.
Reviewing the Top Ways to Price Your Rental Property
As you can tell from the info provided in this article, figuring out how to price your rental property is a serious challenge. Remember to do your research, and don't be afraid to start high before lowering rent to get more interest. If you need help pricing your rental property, you can reach out to the rental property experts at Home River Group.