let’s talk : DETERMINING RENTAL RATES
This week I spent some time researching the best way to come up with rental rates. Let’s talk about that.
So, as we do, let’s talk Real Estate, let’s talk DETERMINING RENTAL RATES…
Determining how much you should charge for rent can be daunting as a property owner BUT the good news is that there are plenty of tools you can use to help guide you.
#1 Determine How Much Your Home is Worth
Why?! Your home may have appreciated since you purchased it. It is important to know the value! Reach out to a local realtor or home appraiser to help determine the true value of your property.
#2 The 0.8% – 1.1% Rule
The amount of rent you charge can be determined by taking a percentage of your home’s market value. Hence why you may want to know the true value we mentioned above! On average, we typically see rental rates anywhere between 0.8% – 1.1% of a property’s market value.
#3 Check Your Comparables
It is important to see what other rental rates have gone for in your area. Comparables are properties that are similar in size, condition, location and have ALREADY BEEN RENTED (or sold, but for today we’ll say rented because we are talking about rentals). Do NOT use active listings as comps. Active listings show you your competition, not what has proven to work.
#4 Consider YOUR Costs
You will want to ensure that the rent covers AT LEAST your mortgage payment, plus home repairs, taxes, insurance, and any other fees associated with the property.
#5 Make Sure YOU Are In COMPLIANCE With Local AND State Laws
Rent control laws may limit what you can charge for rent, security deposit and lates fees. Each state has different laws, so it is important to ensure you are in accordance with such rules. If you are unsure, reach out to a local realtor or attorney to help you come up with your rental stipulations.
That is all folks! Keeping today short and sweet. Do YOU use any other methods to help determine rental rates for your properties?!
Feel free to comment on the blog post HERE and let us know what YOU think!
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Data Sources for Today’s Content:
Me – this is based on my own personal experience