How much rent should i charge for a house? Discover what is the optimum rent amount that will maximize your profits while keeping vacancy rates to the minimum.
When deciding on how much rent a rental property can fetch, its home value is a good place to begin. This simple yet effective methods has been long recommended by many rental property investors.
The general rule of thumb is to charge a monthly rent that is 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, your monthly rent estimate will hover around 1%+ which works out to be $1,000 or less. If your home value is $350,000 or more, it's probably more feasible to ask for about 0.8% which is equal to a rent of $2,800+ per month.
In general, we do not recommend charging a monthly rent that is less than 0.8% of your home value because you need safety net to protect your rental profits against mortgage rates hikes, major property repairs or extended periods of vacancy.
While this method is great for arriving at a rough estimate, never rely on it alone to determine your rent amount.
Comparing rent prices seems straightforward enough but making sure that you're comparing apples to apples takes requires attention to details.
The size, type (e.g. single family home, duplex etc) and condition (e.g. bare vs fully-furnished) of rental properties that you use for rent comparisons should be as similar to yours as possible. On top of that, you should restrict your search to recent rent prices (in the last 3 to 6 months).
Whenever possible, compare the average rent prices of houses in the same neighborhood as yours (within 1 mile or 1.6 km). If insufficient data is available, then you can expand your search to rental houses in the same town.
So now begs the question: Where do I find the average rent amount for similar rental properties?
In this day and age, online classified ads are the most effective way to determine the amount of rent your rental property can command. Another big bonus is that these classified ads sites often have a "Housing Wanted" section where you can find prospective tenants online.
Craigslist, eBayClassifieds and Backpage are the biggest and most active classifieds websites for rental properties. There you will find a wealth of information, including the asking rent amount by zip code.