How to Set The Right Rental Price for Your Property
Do the Research to Know Your Value
When you’re trying to determine how much rent to charge, there are a number of things you’ll need to think about.
The best place to start is by doing some research into what landlords are charging for similar rentals in your area. If the rent you want to charge is unreasonable in comparison to other local rentals, you may struggle to find a tenant.
Websites like Kijiji or Facebook Marketplace can show you the rates your competitors are offering. When comparing other local properties to your own there are a number of things to consider.
The ‘rentability’ of your property depends on:
Flooring and finishings
Number of bedrooms and bathrooms
Amongst all of these factors, location is probably the most important. Things like whether your rental is accessible by public transportation, it’s proximity to stores, banks, or schools, and how ‘nice’ or ‘safe’ the neighborhood is, will all affect your pricing.
You must also consider if your rental is in a basement, or which floor it’s on in a building. It goes without saying that a penthouse apartment is not likely to be within the same price range as one on the ground floor.
The second most important factor is size. When researching other rentals in your area, be sure to compare the square-footage to your own before anything else.
Once you’ve determined the average price of similar rentals in your area, then you can start to play around with numbers depending on other factors. Let’s look at the most important ones.
1. Utilities Included
There is no established rule saying whether or not you should include utilities in the rent price. The choice is up to you. There are pros and cons to both. With all-inclusive utilities, it will be easier for your tenants to make one monthly payment only, and it will also protect you from situations when delinquent tenants fail to pay utility bills for months on end. However if your tenants start to abuse their all-inclusive utilities, such as leaving lights on when they’re not home, or using all of the hot water in the house, you will have to confront them about it.
The benefit of having tenants pay for their own utilities, is that they tend to be more responsible with their usage of heat and hydro, which will be one less thing for you to have to monitor or stress over.
2. Furnished or Unfurnished
If your rental is furnished or semi-furnished, you will want to ask for a security deposit in case of damage. For obvious reasons, furnished apartments cost slightly more than unfurnished or semi-furnished.
In general, a semi-furnished apartment usually has the basic big pieces of furniture—sofa, bed, dresser, and table and chairs. You may not expect kitchen utensils in a semi-furnished rental where those would be present in a fully furnished apartment. That’s why you should feel free to charge a little more in case your place is packed with all essentials and deserves to be called ready-to-live. Since a semi furnished apartment has fewer features, the rent is cheaper and the security deposit is also lower.
3. Landscape/ Exterior
This factor is especially relevant to residential houses. How big is the surrounding area? Are there any amenities like a swimming pool or garden? Is the territory taken care of or requires investment? Answer these questions to see if you should charge more or conversely make a small discount.
4. Garage or Parking
Another factor that will affect a rental price is the presence/ absence of parking or a garage. This is especially true if your income property is located in a busy part of a city with limited street parking.
5. Separate or Private Entrance
Some people might say that private entrances are not a big deal, while others might consider it a privilege and agree to pay slightly more for the comfort of having one.
6. Ample Closet, Additional Basement or Attic Storage
Space is money. And that’s especially true for major American cities where each square foot is worth hundreds of dollars. Whatever type of additional space your property has, it’s a reason to charge a little bit more. Stay rational, however.
7. Hardwood Floors, Stainless Steel Countertops, and Other Details
Needless to say that such finishings add value to any property. They cost money when you buy and install them, so it’s completely normal to ask for a slightly higher rental price if your property has any expensive appliances.