What goes into the rental price of your investment property? It’s much more than picking a price that seems like a good idea!
Whether you’re thinking about putting your spare home up for rent or feeling ready to invest in properties to grow your wealth, the right rental price can set you up for success—or failure. When the rent is too high, you’ll struggle to find a tenant willing to pay that price. However, if you set the price too low, you won’t generate enough income to make a profit on your property. With the sizzling rental market we have in the Hampton Roads area, taking advantage of those rising rental rates is crucial!
How do you know the best monthly rent price for your Hampton Roads investment property? You need a rental price analysis. Here’s why.
An Empty Property Is Expensive—but so Is the Wrong Tenant
Owning a rental property is a long-term investment strategy—but you can quickly lose plenty of money if you struggle to place a tenant in your home. When your rental property doesn’t have a tenant, you pay for everything, including utilities and lawn care.
Why would it be hard to find a tenant when your property is “rental ready” with plenty of amenities to attract a paying tenant? Finding the right tenant is no easy task. Sure, you can put “someone” in your property. However, the wrong tenant is worse than keeping your property empty until you find the right tenant.
Bad tenants cause damage to your property and often fail to pay the rent. After one bad tenant—and the possible struggle of managing an eviction—you’ll realize the importance of doing the research to set your rental price appropriately. You can't afford to place a bad tenant.
The Right Price Brings the Right Tenants
Tenants are smart: they know what they “should” pay for a property like yours. Tenants often do considerable research online before they ever set foot on your property. Doing your own research means you'll stay competitive.
- When you set the price too low for your rental property, you show potential tenants that you don’t understand the value of your property. This can attract tenants who won't care for your property at the level you'd expect.
- When you set the price too high for your property, potential tenants quickly realize they can find a nearby property with similar amenities for a lower monthly rental price. Your property then sits vacant—costing you money every month that you can’t place a tenant to start generating rental income. If you happen to be active duty, this can quickly cause you some major complications.
Is there such a thing as a price that’s “just right?” Thankfully, there's a “bullseye price" for every property—but it takes some investigating to get there.
What Is a Rental Analysis?
The first step is to put aside any preconceived wishes you have about the rental price you want for your property. You’ll only realize your property’s income potential when you let the numbers guide you to the right rental price.
1. Investigate the Neighborhood
The success of your Hampton Roads rental property involves more than just the house and property. What's going on in the neighborhood to attract excellent tenants? Look at the factors that make a neighborhood desirable for renters.
- How are the schools?
- Is your property close to restaurants, shopping, and highways?
- How "walkable" is the neighborhood?
- Are there too many vacant properties?
- How is the crime rate?
Renters look for homes in excellent neighborhoods. If your property is in an in-demand area, factor that into the rental price.
2. Compare to Similar Properties
What's the rental price for properties similar to yours? Choose a few rental properties in the neighborhood and compare what you offer to those homes. Look for similar:
- Square footage
- Number of rooms and bathrooms
- Parking situations
- Condition of the property.
Renters will compare your property and price to other similar homes in the neighborhood. You'll have better insight into the right rental price if you do the same research.
2. Check the Property Value
- What's your property worth?
- How much did you pay for it?
- What are the property taxes and local fees to own the property and run it as a rental home?
Make sure your rental price covers your expenses! You won't recover everything you paid for a property in the first months or years of owning a rental home. Remember, an investment property is a long-term strategy for building wealth.
However, if you set the right rental price, you should generate a profit every month. Make sure your monthly rental price covers monthly expenses, plus gives you enough cash flow to build your long-term wealth. You'll also want to make sure you have enough cash flow to cover emergencies.
Rental Price Analysis Is a Science! Use the Right Scientists
If running the numbers isn't your thing, you need the right scientists to help you find your bullseye rental price! Your Renters Warehouse Hampton Roads property managers have the skills to generate the thorough rental price analysis you need to price your property for the right tenants.
We apply market analysis while factoring in the unique aspects of your Hampton Roads investment property. After we run the numbers, we provide you with a FREE report to help you set the best price to generate long-term wealth. Don't risk losing money on your investment! Contact us for your Free Rental Price Analysis!