One of the first questions we often get from investors involves how much they can charge for their rental home. There are many things to consider when you’re establishing a price for your property.
Conduct a Thorough Market AnalysisDo a thorough market analysis to find out what similar properties are renting for in your area. This is a little different in St. Pete because neighborhoods change quickly simply by crossing a street. Values are defined by a small geographic area. Using sites like Zillow and Trulia can be challenging. They don’t know the borders or the neighborhoods well. Do your own analysis, and when you’re searching, use Zillow, HotPads.com or Rentals.com to find out what’s available. Just remember these are available rentals, not properties that have been leased. As property managers, we have access to the MLS, which shows us rentals and what the homes have actually rented for. You want to try to get as much of that information as possible.
Make Reliable ComparisonsOnce you have gathered all that information, make good comparisons. If your neighbor rented out a home for $2,000 a month, that’s great. But maybe it’s a four-bedroom home with a pool, and you have a two-bedroom home with no pool. Make adjustments for the size of your property and its condition. It’s easy to get all these comparables and then adjust your rental value based on upgrades and condition. Consider all of this information before setting your rental rate.
Prepare to Make Price AdjustmentsIn this market it’s okay to be aggressive because things are renting quickly. But it’s very important to be able to make adjustments quickly. We collect all the information on how our marketing is working. We want to know how many people are looking at our ads, how many people are contacting us, what questions they’re asking, and how many showings we schedule. This can usually tell us if we are priced too low or too high. Then, we make adjustments. It’s not always a matter of pricing that prevents us from renting out a property. Sometimes, calls and emails tell us that our advertising is working, but something else is missing. Maybe it’s a policy that isn’t tenant-friendly or our photos aren’t giving an accurate portrayal of the property. We analyze all that before dropping the price. Just make sure you can make those adjustments quickly. You’ll never make up the money you lose with a vacancy that is one or two months longer than it needs to be. Get a good qualified tenant in the property in the shortest amount of time possible for the most amount of money.
These are some of the things to consider when pricing your rental property. If you have other questions, please contact us at Dean & DeWitt Property Management.