Having a competitive rental rate is important to any landlord. There are disadvantages to having rent that is either too high or too low. Find out if you’re charging the right rent for your property by reading our tips.
Start with the baseline
Every year, HUD publishes a report with fair market rents for every state. The “fair market rent” is the average of what 40-50 percent of people living in a specific area paid the previous calendar year. You can look at their online system and select a county or metro area. It’s not incredibly specific, but it’s a good place to start.
Most local newspapers publish regular articles on rental prices in their city. And in tight markets, you’ll often find forums and city council meetings that are dedicated to the housing market and the rental cost. Look for what the average price is for your city. How far off of it are you?
Newspapers are also useful in finding the vacancy rates. You’ll want to know the overall vacancy rate and potentially the multifamily vacancy rate. Overall vacancy rates are considered balanced at 5%, anything less indicates high demand and you have the potential for higher rental prices.
Citywide numbers are a great place to start and help you gauge that you’re in the right ballpark, but your neighborhood rents are the most important data for setting your price. Sites like rentometer.com aggregate data in one place around a specific address. It’s a great tool that’s as easy as typing in an address – and it’s free.
Knowing what the market is doing and what your fellow landlords are charging will help you set a rent that is just right for your property.