Pricing at the sweet spot for rental property is fairly easy. As with any property, price estimates depend on location, location, location so not all property pricing is the same. But there are some dependable resources to get the best rental price for the area.
The best way to get a solid rental price estimate for your property is to get a property appraisal of your property by a licensed property appraiser. An appraisal will cost around $150 -$200. For this you will receive a detailed report of property lot size, taxes, square footage number of bedrooms, considered amenities, the area location value. An appraisal report will also chronicle the condition of the property based on recent sold comparables. The report should document the parameters used to reach the appraised value and the document should give you three appraisal prices.
1) The appraised price of the property for bank financing purposes or for sale price estimate.
2) The estimated rent for the property based on appraised values.
3) The appraised cost of replacing the building structure of the property excluding land cost.
A professional property appraisal is probably the most accurate resource to gauge your price.
But, with a little internet digging and some elbow grease, you can find other effective sources and approaches to reach a reasonable price.
The internet is a convenient source to arrive at a reasonable rental price. Look for rental properties in your area on rental sites like rentals.com, rent.com, Zillow.com, and local property management sites. They usually allow you search by community or zip code and can include number of bedrooms, baths, lot size, square footage and often include several photos. A call to a local property management company can reveal a lot about local pricing. Try to find recently rented properties on their site and inquire how long the area listing was on the market. If it sat for months the pricing was probably too high. If it went within 30 days or less, it might have been under priced. You can fine tune your price based on this data. The local newspaper is another great source.
Property condition also affects price. It is painful to realize but, we often over-estimate the condition of our property. Are fixtures up to date, heating and cooling systems working, kitchen bright, paint fresh, floors in good condition, bathrooms clean and updated, windows and window treatments fresh, fireplace clean? Is the house de-cluttered? Outside, is the exterior painted or washed, window sills, shutters, chimney and roof in good shape? Are landscape areas well maintained? Is the outdoor lighting or security system working? Property condition is essential to proper pricing because, unlike potential buyers who can improve a property over time, renters care most about property condition as is.
Remember, renters have little or no control over quality of future improvements. The condition of a property dictated the quality of the renter. The renter is the most essential element of a successful real estate investment. You will do well to heed the property manager’s unwritten law: the quality of the renter is directly related to the condition of the property. Therefore, any dollars spent on property improvement and repair is well spent to insure a good rental price and responsible renters.
Great renters will enjoy and care for your property and are far less likely to give you headaches with evictions, property destruction, abandonment and other landlord nightmares. On the bright side, loosening your purse strings for improvements and repairs can help at tax time. Repair expenses are deductible from your rental income, and property and appliance improvements can be depreciated over time, (save your receipts and record your time and mileage spent on projects). As another plus, you may be able to push up your price a bit.
It is better to slightly over-price a rental property. You can always negotiate down to pull in a great rental prospect. It is harder to ask for more.
Rental properties can be profitable investments. Though the rental preparation work may seem daunting, a little time and money spent on pricing research and some spit and polish will go a long way toward renting your property to the right renter at the right price.