Determining the rent amount for any property can be difficult. The rent should be set at a competitive balance between an amount that will attract applicants and one that will deliver a profit. Although finding this number can be tricky to do, an established Northern Colorado property management company will have the intuition and expertise needed to set a rent that is fair, competitive, and profitable.
If you’ve wondered how property managers determine the rental cost, here is a basic introduction on what goes into making the decision.
Often times landlords or property managers will start by calculating one percent of the value of the property. For example, a home valued at $200,000 could be rented for $2000 per month. This method could be a good starting point. However, it does not take into consideration a number of other applicable factors such as location, amenities, mortgage, property maintenance and more.
One of the greatest benefits of working with professional property managers is being able to take advantage of their expertise and understanding of the local rental market. Your property manager will look at your neighborhood and take into account its value within the city. They will also invest time into researching comparable properties that have recently been rented out or are currently available. They will look for units that are similar in terms of bedrooms, bathrooms, square footage, location, amenities, and even age. Comparing this information with the individual features and amenities of your property will help establish a rent amount that is both logical and competitive.
In every city, there are neighborhoods and locations that are highly desired and sought after. Apart from size, location is one of the most important factors for tenants and a considerable element for determining the rent amount.
There will always be people who are willing to pay more for a house or apartment in a popular location, but people will also pay more for a home that is conveniently located. If your property is close to the city's public transportation, restaurants, shops, schools, universities, parks, and other prime locations, you will surely be able to raise the amount you charge.
Just as a good location can increase the amount of rent you charge, other locations may also force you to detract from the rent. If the rental property is found in a less-desirable neighborhood, a property manager might consider reducing the amount they charge.
The size and layout of a property play an important role in determining the monthly rent. Homes with a bigger square footage, more bedrooms and bathrooms, or a popular floor plan will often attract tenants who understand that they may need to pay more. Similarly, renters know that they will have to pay more for an apartment on the ground floor than one on higher floors.
Another factor that can affect the rent amount is the amenities available at or with the property. Upgraded features such as new appliances, flooring, and countertops among others can influence the price, as can other amenities such as a laundry room or fenced-in yard. If your property comes with amenities that will add to a tenant’s comfort and convenience, such as air conditioning, a washing machine, dryer, dishwasher, cable or satellite TV, or wireless Internet, you may also be able to adjust the amount you charge each month. Neighborhood swimming pools, playgrounds, fitness centers or other community amenities can also increase the appeal and value of a rental home.
Property managers have experience in renting out homes both with and without unique amenities that allows them to determine the true value from any available feature. They have a detailed understanding of the factors that should and could affect rent prices along with the intuition to know what factors are not worth raising a price for.
Some of the most important considerations that property managers use in setting the rent amount are the expenses of owning and maintaining the home. Before they can think about their profit, property owners must first be sure that the rental income is set high enough to cover the mortgage, property taxes, property management fees, insurance, and maintenance costs of the home. The rent paid each month by a tenant is used to pay for these necessary expenses and additional amounts can then go towards profitability.
All Property Services has over 30 years of local experience as an expert Northern Colorado property management company. Contact us today if you are looking for a reliable property manager to help determine the rent for your property.
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