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How Much Rent Should You
Charge Your Tenants?
- Landlord Tenant Guide PART 1
Are
you
looking for a complete landlord tenant guide that will show what is the
right rent for your rental property? Learn how to figure out the
perfect rent which will maximise your rental profits while keeping your
vacancy rates to the minimum with this landlord tenant guide.
Just like many decisions that you will have make as a landlord, it's
important to get your facts first before jumping in. Read on
and find out how to arrive at the right rent amount:
Make Use of Your Home Value as a Rough Estimate of the Rent
If you still have no idea on how much rent to ask for, a good place to
start looking will be the home value of your rental property. Some
professional landlords recommend this method as a crude measuring stick
for your rent.
The general rule of thumb is to set your monthly rent equal to 0.8 to 1.1% of
your rental property's home value.
The
higher your home value, the lower your rent percentage is likely to be.
If your home value is $100,000 or less, the estimate of your monthly
rent can hover around 1%+ which will work out to be $1,000 or less. If
your home value is $350,000 or more, it's probably more feasible to gun
for about 0.8% which will equal a monthly rent of $2,800 or more.
In
general we do not recommend that charging a monthly rent that is less
than 0.8% of your home value because you will have a safety net to
protect your profits against interest rates increases, major repairs or
long periods of vacancy.
Do remember this method is only helpful
as a rough estimate of your rent. Never rely on it alone as a magical
short cut to decide on your rent amount.
Compare the Asking Rent of Similar Rental Properties in Your Area
Comparing rent prices may seem like an easy affair but there are a few things you will have to watch out for.
Always
compare apples to apples and pears to pears. The rental properties that
you use for comparing should be of a similar type, size and condition
of your own. On top of that, you should only look at recent rent prices
(in the last 3 to 6 months) of properties in the same neighbourhood.
So how can you get your hands on these highly helpful information?
The classified ads in your local newspaper are the traditional way but
they remain highly effective till this day. If you want to save time
and money, you browse to your local newspaper's website to see if they have an online version of their classified ads.
Nowadays
rental property owners also have the luxury of searching landlord
tenant guides and comparing rent prices online. The more popular
websites include Realtor.com, and Apartments.com . These sites are highly helpful as a landlord tenant guide because their listings tend to contain more details and photos.
If your rental property is in the United States, the HUD User
website will be another helpful place to carry out your rent research.
This government website will regularly publish the updated fair market
rent for different areas in the United States. Even if you are not
renting out your property to section 8 or subsidised tenants, it's
still a good place to look.
If you are already renting out your rental property, find out what will happen your rent is either too low or ridiculously overpriced:
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