Before welcoming a tenant to your Phoenix rental home, you need to ensure you have the right rental rate. Setting the right rate is essential, and there are many factors that could influence the property owner’s decision on which rate to set.
The right rent value should be able to pay for all the property’s expenses. It should pay for any mortgage payments, maintenance or repair fees, and vacancy expenses. You should also consider a profit margin for yourself.
At Keyrenter Premier, we believe that setting the right rental rate is critical to growing your investment and gaining you some financial freedom. This is why we have put together this article. It will hopefully provide you with some great advice on how to price your home for rental.
Compare Your Property
When you are calculating your rental rate, you shouldn’t do it in a vacuum. You need to consider the market around you, so it’s a good idea to research the following:
The Local Neighborhood
To best understand where your property sits in the market. You need to start looking at your competition. Research the local neighborhood, its prices, and trends. This way, you can set a competitive price that fits the market and attracts prospects.
Number of Bedrooms and Bathrooms
When comparing your property against others, make sure you are using properties that are comparable in size, number of rooms, and bathrooms.
Single Family Homes vs. Multifamily Homes
Similarly, to the number of rooms, you should only compare your property against other single-family homes, condos, or townhouses only. Similarly, if you invest in commercial properties, you will need to compare against those.
New Construction vs. Old Construction
Avoid comparing the price of a new rental with an older one. Tenants are far more likely to spend more on rent with a newly built unit, that is in mint condition. Where there are visible signs of wear and tear, and the appliances are new compared to the rentals that have been around for some time.
Sources of Comparison
As a property owner, there are ways to find valid sources of comparison for rent payment:
You should check out popular property sites online and view similar Phoenix properties to yours. Research units that get easily occupied and the ones that you’ve seen for weeks and have reduced their pricing.
Physically visit Phoenix rentals that have similar property types to yours. You could even interview the owner to learn if a lot of prospects are interested in renting the unit.
Speak to a Property Manager
Most property management companies promote a free rental analysis. You can get in touch with one, for advice on your property, since they have industry experience and are exposed to a lot of properties. A property manager can also help you manage inspections, legal matters, and rent collection, amongst many other things.
Adjust Using Your Amenities
If you own multiple properties and set the same rent rate for each of them, you can end up not maximizing your rent income. You should practice basing prices on the desirability of each room:
Would you set the same rent price for a unit that faces a parking lot as one that faces the ocean? This is easily noticeable in hotels where rooms that have impressive views fetch a higher price per night of stay. In which case, you should adjust the prices of your properties accordingly.
Updates to the Property
If you’ve recently updated your Phoenix rental with the latest appliances, better countertop, and other attractive amenities, you can command a better rent price.
The bigger your Phoenix rental home, the higher the price you can set. Having more space makes a difference, especially for larger families.
The more amenities you can offer in terms of, furnishings, a parking lot, garden area, or patio, the more you can increase your rental value. A lot of renters appreciate having more property features and willingly pay for the extras.
The floor level location of your Phoenix rental unit matters. The higher the floor, the higher the price, typically. People like having views and desire additional privacy.
Assigning the right rental rate for your Phoenix rental home doesn’t mean doing it once and forgetting about it. You need to be attuned to the rental market environment and learn to adjust to the demand. If your location has turned hot from new infrastructure being built, you can calibrate and set a higher rent.
At Keyrenter Premier, we believe that setting the right rental rate is very important to the overall success of your investment. So, if you have any questions, please don’t hesitate to contact us at Keyrenter Premier today.