What should I charge for rent?
-
The overall rental market for like properties
-
The 1% rule
Before starting, there’s one item you need to know first – your actual, or if a new property, estimated costs.
On our Capitalization Rate (Cap Rate) Calculator we’ve created the ability to enter your expenses, rent, and other income (wash/dryer, cell sites, parking, etc.) and estimate your cap rate – the higher the better! Generally you’re looking for 5-10% Cap Rate on rental properties.
What should I charge for rent?
First, look at the rental market for comparable properties (comps). As a Realtor with access to the MLS I pull comps from our large database of current and past listings. I look for properties with the same square footage, amenities (pool, in-unit washer and dryer, balcony, parking, etc.) and also the overall furnishings. Has the kitchen been updated or is it stuck in the 70s? Sporting shag carpeting or updated flooring vs. refinished hardwoods. Each unit will bring something different but, overall, you’ll be able to find a price point that is comparable to your rental.
Next, I turn to everyone’s favorite – Craigslist. It’s no secret you can find some gems on Craigslist. I say that with truth and sarcasm in the same breath. Sometimes you have to weed through a bunch of ads but when it comes to rentals, there can be good data! Not all property owners use a Realtor when listing their units so the MLS doesn’t contain everything – it’s only as good as the data entered.
On Craigslist I’m looking for repeats to weed out but also more comps.
Is there another way to evaluate my rental costs?
Absolutely – the 1% rule. This one is quite simple and works great for a single family home, or non-multiunit property. Take your estimated property value – Be accurate and don’t inflate it, ca’mon now… – and multiply by 1%. The answer is your rental price. Need an example:
- Home price: $257,000
- 1% Multiplier: x .01
- Monthly rent: $2,570
If you found this post useful, head over to our Learning Center for more great information!
Like this post? Perhaps you’ll enjoy some of these other posts:
0 Comments