The question of how to set a price for your rental home gets a lot of debate, and many people have strong opinions. Our experience in the 13-plus years of managing rental and investment property leads us to considering three main components when we price a property.
The first step is to get an idea of how much units similar to yours are leasing for in your area. If you’re an individual landlord without the resources of a property management company, this can be a bit of a challenge. Try to find this information online. You can go to Craigslist and search for comparison or you can call rental ads you find in the newspaper. Find those comps. If you have a three bedroom, one bath apartment or house, you need to know what other three bedroom, one bath properties are renting for in your neighborhood. Make sure you’re comparing properties that are similar. It’s important to compare apples to apples, not apples to oranges.
Condition and size
If you have a small two bedroom, one bath apartment, you cannot price it based on the rental rates of a large two bedroom, one bath house. When you’re gathering comps, you also have to think about condition. Properties that are outdated will rent for less than properties that are new with recent upgrades. Those things will play into the way you evaluate the price of your unit. If you have a good sized unit and you have nice finishes and updates, and you know your comps, you can push the price up. If your property is on the smaller side or you have concerns about its condition, look at your comps and price it on the lower end of your range.
Location is absolutely the key to all of real estate. As you’re looking at your comps and trying to settle on a price, you have to consider the property’s location. Look at what’s nearby; is it located in an area with good schools, parks and shopping? Or, is it outside of town in an area that’s not great and a little run down? These things must be taken into account.
Look at all three of these components, otherwise, you’ll overprice your property or underprice it. That overpriced property will sit on the market How to Set the Best Price for Your Chicago Rental Homelonger and lose potential rent. An underpriced property will rent quickly but you’ll lose $100 or $200 a month.
Once you have the right price, the home will lease without a problem if you’ve got a good product that’s in good condition. If you’re not sure how to incorporate these things into your pricing, you can contact us at Letts Property Management, and we’d be happy to tell you more.