Becoming a Property Owner: A Beginner’s Guide to Establishing Market Rents
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So you want to become a landlord! It’s an exciting time and an exciting adventure that comes with plenty of new territory as you start figuring things out. One of the most difficult aspects of being a landlord is figuring out how to set rent. Here are a few tips to consider:
1. Compare Prices
This is one of the first things you should be doing when tackling this problem. Find rental properties in your neighborhood or in similar areas that are comparable in size, age, and condition to your property. This will give you a great ballpark for what the current market value is for your rental property and will allow you to maximize profits without underselling yourself. A quick Google search can help you find this information, especially if you manage multi-family apartment communities.
2. Consider the Condition of the Property
Your rental prices should make sense with the condition of your property. If you take the time and care to ensure your rental property is in better condition than competitors, you should not be charging less than them. On the flip side, if your property is not as nice as other properties, you will be hard pressed to find tenants willing to pay more. The price you can charge and have happy, long-term occupants is tied to how well you maintain and manage the property.
3. Inherited Tenants
Inherited tenants can be a difficult challenge to be with. When a tenant has lived in a rental property for a while, they are often used to paying below-the-market rent. You have a few options on how to handle this situation. First, you could grandfather them in with the old rent rate until they move out, which may take a while with below-market rent. Second, you can slowly ease the rent up. Third, you can make a jump in rent to close the gap and be at market value. This often results in many tenants moving out or asking you to improve the property, but it also increases profit margins. Carefully consider what to do with your inherited tenants.
Becoming a new landlord can be intimidating, but it is well worth the growing pains. If you are considering utilizing a residential property management company here in Boise, Idaho, give us a call at (208) 314-1400 or contact us for more information.
Becoming a new landlord can be intimidating, but it is well worth the growing pains. If you are considering utilizing a residential property management company here in Boise, Idaho, give us a call at (208) 314-1400 or contact us for more information.