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How
to Figure, Calculate and Determine Your Rent
Free Landlord Help PART 2
"How
do I figure
and calculate how much rent to charge my tenants?" Our free landlord
help will reveal the answer by showing you how to determine if the rent
you are charging is too low, too high or just right.
This Part 2
is for landlords who want to know if they are charging the right rent -
Click
here to Part 1
of this Guide if you want to learn how to determine and calculate rent.
How
to Determine if Your Rent is Too High and Why it's a Bad Idea to
Overcharge
Most rental
properties have vacancy rates
ranging from 5 to 10% depending on the local demand. If your rental
property is consistently empty for more than 10% of the time, it may
mean that
your rent is too high.
If
you suffer from very high tenant turnover rates, it's another tell-tale
sign that your asking rent is too much. High tenant turnover rates
means that your renters don't stay on for long and refuse to sign a
long term fixed term
lease with you. Your tenants treat your rental home as
temporary accommodation while they are finding a cheaper place to stay.
Naturally
it's every landlord's dream (including mine) to be able to collect
jumbo rents every single month but there is a heavy price to pay if you
overcharge.
When you demand sky high rents, a few bad things can
happen. First your rental property may end up suffering from long
periods of vacancy because it takes forever just to find someone who is
willing to pay your asking price.
Remember that for every one
day that your rental property goes without a tenant, you are losing
precious rent income.
Another
stinging drawback of overcharging
rents is that you will end with a very small pool of potential tenants
and finding an excellent renter will not be easy. As we have always
stressed, having a good tenant is very important to ensure your
tenancy is both profitable and worry-free.
If your
rent is too high and you find yourself asking, "How do I figure and
calculate how much rent to charge?", then Click here for Part 1 to
figure out the correct rent for your rental home with our free landlord
help.
If you ask around for free landlord help and advice,
most professional landlords and full time property managers will rather
collect a bit less rent every month than to suffer at the hands of a
nightmare tenant.
How
to Figure if Your Rent is Too Low and Why You Should Not Charge Too
Little
On
the other end of the scale, we have landlords who are either too casual
or generous and undercharge their tenants. While it's not entirely a
bad thing to ask for low rents because you can slash your vacancy rates
and have stable rental income, there are too many compelling
reasons to give yourself a raise in rental income.
How
do you know if your rent is too low? If you haven't reviewed and raised
your rent in 2 years, chances are your current rent is already lower
than the going market rate. To figure out the current rent for your
rental home, compare the rent prices of similar properties in the same
neighborhood.
Another
method is to compare your rent income versus your total rental
expenses. While It's quite common for the rent to be less than the
total rental expenses, your rent should be at 75% of the total
expenses. Otherwise it either means that your rent is low or your rental
property was a terrible investment.
If you are
planning to sell off or
refinance your rental property soon,
low rents will also depress the value of your rental property. When
rental property investors and mortgage lenders are looking at your real
estate, your rent income will be an important factor. The higher your
monthly rent, the higher the value of your rental property.
Remember as
a landlord, you own a business and not a charity. Will you
run into financial difficulties if you have to suddenly shell
out a huge sum for emergency repairs or legal lawsuits?
After you calculate and determine how much rent to charge, you can
always
make use of our rent
increase letter for free landlord help to raise your rent
easily and painlessly.
Personally if I have an excellent and low maintenance tenant, I may
charge him a rent that is slightly below market rates to entice him
into staying on. However I will still make sure I am able to cover my
rental expenses before even thinking about it. If you are
looking for more free landlord help,
Read
what our visitors have to share below OR Scroll down to
add your own comment
How do You Calculate and Determine
How Much Rent to Charge Your Tenants?
Finding out the perfect rent for your property is so crucial yet it can be quite tricky at times. How do you figure and decide the rent for a rental home? Share your valuable experience with everyone here - We will love to hear your tips, comments and free landlord help:
What Our Visitors Have to Share on How to Charge the Right Rent
Click on the links below to read the valuable tips that our other visitors have to share:
Always Review Your Rent Yearly
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As a real estate counselor dishing out free landlord help, I will sometimes chance across landlords who have been charging the same rent to the same tenants ...
Do you want to learn MORE practical must-know facts on
dealing with tenants?
Return
from
this Free Landlord Help page to our Managing
Rental Property guide
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