One of the first questions I’m asked by homeowners who are considering renting their property is ‘how much will my property rent for?’
While there’s a time and a place for consulting a crystal ball, decades of PPM experience leasing and managing rental properties has shown us how to determine rental market value.
Top Five Factors for Determining Rental Price
- Condition of Your Rental Property
- Time of Year
- Active Rental Competition
- Closed Rental Price History
- Marketing Days Prior to Vacancy
Condition of Your Rental Property
The condition of your property compared to active competition and to recently rented units will have a direct impact on the decision making of your prospective tenants. It is important to find out if the condition of your property meets current tenant expectations. It is also important to make sure you have a realistic idea of the return on investment of any renovations or updates that you may be considering for your property.
Time of Year
The strength of the rental market varies throughout the year. In most years, the highest number of closed rentals and highest number of prospective tenants looking to rent occurs in June, July and August. The rental market typically starts to heat up in early Spring and cool down in early Fall. Keep in mind that renting certain types of properties are more susceptible to time of the year than others.
Active Rental Competition
Supply and demand. If there are four active rental units on the market and only one property has rented in the last 30 days, this provides many options (high supply) to few prospective tenants (low demand). This scenario would likely weaken your pricing strategy. If your property is the only active rental unit on the market and four properties rented in your neighborhood in the last 30 days, this scenario may provide some strength to your pricing strategy.
Closed Rental Price History
It is important to look at real data that shows rental prices for similar properties in the recent past. The range of closed rental prices will help to determine the threshold of how much tenants are willing to pay to rent a property similar to yours.
Marketing Days Prior to Vacancy
Knowing how far in advance of vacancy your property can be marketed provides a timeframe for assessing the market and adjusting the asking price accordingly. We have found that 60 days prior to the move-in availability date is the most ideal time to start marketing a rental property to prospective tenants. When looking for their next home, most tenants are looking and (most importantly) making decisions around 30-60 days prior to when their current leases (or living situations) are coming to an end.
We would love to help you determine the rental market value for your property. We are happy to provide you with a complimentary rental price analysis and information about our expert approach to leasing and managing our client’s properties.