There’s no better time than the present to own rental property in Salt Lake City and the surrounding areas. Rents have increased by 50% over the last decade. If you own investment rental property or are considering buying some, then you need to learn how to determine the ideal rental rate.
You need to perform a delicate balancing act of considering the current rental market, your home’s value, and your expenses. Use this guide to ensure you calculate the ideal rental rate for your property.
Start by figuring out what your property is worth. This isn’t how much you paid for the home. It can help to have an appraiser look at the house to determine value.
Rent is typically .8-1.1% of the home’s value. This will give a range of rents to provide you with a starting point. You’ll then use the following factors to narrow down your rent to a single price.
Look at other rental properties that match the profile of yours. Consider the size of the home, location, and amenities when comparing homes. Here are some other factors to consider when comparing rents.
- Number of bedrooms
- Number of bathrooms
- Lot size
- Year built
- Recent remodeling
- Zip code
By comparing your property to the market, you should be able to narrow down your rental range to a competitive price.
Keep in mind that you don’t want to price your home too low; this could welcome undesirable tenants to apply. You also don’t want to price your home too high and scare away desirable renters.
While matching the market is important, you need to consider the current demand. This can both positively and negatively affect your asking rental rate.
You can use demand trends to your advantage. For example, larger properties are in higher demand during the summer and early fall as families try to move before the school year.
Before you settle on a rental rate, you need to consider your operating costs. You need to account for your expenses and still be able to make a profit.
- Mortgage (if applicable)
- Maintenance Costs
- HOA fees
- Cost of vacant periods
- Property management costs
When calculating costs, don’t forget to factor in your time. Your time is valuable and you need to consider how much of it you want to spend marketing and maintaining your rental property. This is when a property management company becomes a smart investment.
If you calculate your expenses and find that you end up in the negative, then you need to consider raising your rental rate. Compare your increased rate to the market and confirm that your property is still competitively priced.
Does your property have special or unique features that can boost your property value? The right amenity can increase your rent by 3-15%. This includes:
- Washer and dryer
- Swimming pool
- On-site parking
Keep in mind that while you can ask for more rent, these amenities can also increase your maintenance costs. Garbage disposals can increase your rental value, but also cause a noticeable increase in maintenance costs.
Rent Your Property
When it comes to pricing your property, you need to do some market research and follow your instincts. If you need some guidance, it’s smart to seek out assistance.
Our experienced and knowledgeable team can help you value your property. We will do the research required to determine your rental property’s success. Once you agree with a rental rate, we can market your property and screen tenants.
Schedule a quick consultation today, and let’s start renting your property.