It probably wasn’t easy deciding if you wanted to put your house up for sale or rent it out. You thought hard about this, did a market analysis, researched a lot, and finally decided to rent it out. If all that work wasn’t enough, here comes another decision: determining the rent price. Sounds easy, but this can be a challenging part of the whole process.
Setting a decent market price for your rental is sometimes pretty difficult. It can be more challenging if you rent a house for the first time. You do not want to overcharge and get stuck with a vacant rental; also, you wouldn’t want to rent your house for less than it’s worth.
Finding a fair rent price has no universal solution, but there are certain tips you could use to make the process less challenging. We have compiled a few tips you could use to estimate a fair rent price. Each tip we will mention is endorsed by real estate experts.
First Things First!
Before you begin setting a rent price, there are several factors that you need to consider. One of the most crucial factors is why you’re putting your house up for rent. Another key factor is what purpose the rent will serve.
You must know why you are putting the property up for rent in the first place. So before you decide on what rent price you are setting, you should ask yourself: Do I want to earn extra income? Or do I want my property to appreciate while a renter subsidizes the cost for which I built or bought the property?
If you want to put your property up for rent because you want extra income, it could be because you are unable to sell your property, or you are just not interested in selling it. That would mean that you are renting your property from a short-term viewpoint, according to Ryan Mutter, a real estate expert with 16 years of experience. If you are renting with “asset appreciation” in mind, you are renting with a long-term viewpoint.
The motivations for renting vary across all properties and are unique to each owner. However, knowing your long-term objectives will enable you to determine how your rental price aligns with your long-term plans and what price fully satisfies your needs.
Now that’s out, let’s see a few ways to calculate a fair rent price.
Use an Online Rent Estimator
Online rent estimators can provide a solid ground for fixing your rent price. When using an online rent estimator, ensure that you use the one that takes into account any factor that you would like to consider, such as location.
One of the best rent estimators is the online rent estimator by Ofirio Inc. It uses the data you input, such as location, number of rooms, etc., to give you an estimate of what your rent should be. Using a rent estimator is the best way to evaluate properties and get an estimate of what your rent price should be. By using a rent estimator, you will not lose out on any income, and your property will not be sitting empty.
When performing your estimation, fix your rent price in the range you found. Do not forget to take into account both your immediate and long-term goals, as well as your financial needs when renting your house.
Use Your Financial Needs
Although it can be quite touchy, this is an excellent strategy to set a competitive fee that attracts a high-quality renter who wants to stay.
Calculate your monthly expenses, including insurance, taxes, and mortgage payments. Some experts think you may have to spend 15% to 20% of your possible rental income to maintain the property.
Set your rent so that it is sufficient to cover your monthly expenses. Even if you spend more of your rental income maintaining the rental or breaking even, you are still on the winning side. Here’s why: The cost of building or buying your home is subsidized, and the value of your property is likely to appreciate. So it is still a win for you, whichever way you look at it.
Hire A Real Estate Expert
You do not have to go through all the hassle. You can hire a real estate agent to help you through the process. Using a real estate professional can save you a lot of hassle as they can guide you on the best decision for your rental.
Real estate agents have many resources, like the MLS database, which may give them access to a wealth of data and details that will benefit you. You should find a reputable real estate expert that has experience with rentals in the location your property is at. Verify that they possess the qualifications you seek, and do not be opposed to interviewing a few possible candidates.
Your rent price will possibly be determined by an agent using a blend of the other techniques mentioned above, such as using rent estimators and financial needs.
Voila! Even though there is no perfect or universal solution to setting a fair rent price, these tips should help you set a fair price for your rental. Not just a fair price to your renter, but a very profitable one to you too — a win-win!
Our favorite tip is using a Rent estimator as it is easy, helpful, and saves you some stress. We strongly recommend this. Good luck with finding the best and fairest price for your rental!