We've used our articles before at Gulf Coast Property Management to discuss how important it is to set the right rental rate in the wake of a crisis.
- When your rate is too low, you need to raise the price of your rental to meet the increasing costs of maintenance and other expenses that are associated with a successful rental property.
- When your rate is too high, you need to lower your rental property's price to compensate for what the market states that your rental property is worth—and what renters are willing to pay.
However, this brings to mind an important question when it comes to your rental price: How can you know when your rental rate is too high or too low? How can you set the right rental rate for the property you have—without the guesswork?
After the impact of COVID-19, many property owners understandably feel like they need all the income they can get from their rental properties—especially if your own earnings happened to be affected by a job loss. Unfortunately, the best rental rate for your investment home is never based on your needs or feelings—it is based on hard data that requires careful research and insight into the rental market of your area.
While the market rate may differ across Sarasota, Bradenton, Lakewood Ranch, Port Charlotte, or Englewood, the core fundamentals of the research behind setting the right rental rate do not change. This makes your research methods easy to apply, no matter where your property happens to be situated in Sarasota or Manatee County. However, you first need to know what to look for before you can successfully price your property—and that's what we'd like to discuss today.
A quick note: The following article is not a substitute for legal counsel. If you need immediate guidance for successfully managing your rental rate, turn to the property management experts at Gulf Coast Property Management for real-time assistance!
The Keys to Your Kingdom Lie in the Right Research
Optimizing your rental income depends not only on having the right rental rate: it also depends on having excellent renters in your property coupled with an outstanding rental experience for your current residents so that they call your property home long term. The combination of these factors leads to reduced turnover and reliable income.
You might be surprised to know that the right rate leads to less turnover, but consider this; when you set your rental rate too low and ultimately have to adjust it upwards to match the market, you may lose your renters if your increase is too steep and sudden. This makes setting the right rate from the start essential to maintaining the health of your investment.
So, what kind of facets of your rental should you be investigating to set the right price? Consider the following fundamentals of your rental rate from the experts at Gulf Coast Property Management!
The Volume of Rental Homes in Your Area
Start your assessment by considering how many rental homes, in total, encompass your local market. Whether your property is in Port Charlotte or Parrish, this is still a crucial statistic to know. Once you have a rough idea of how many rental homes encompass the housing in Lakewood Ranch, for example, assess how many of those homes are vacant to give you an idea of demand in that particular neighborhood. You also want to evaluate how long those homes have been on the market if such information is available.
Break These Numbers Down by Type for More Detail
Once you understand the macroeconomy, it's time to start narrowing down your search specifications. You can do this by determining the divisions of property types in your research area. This is important because single-family homes and multi-family properties experienced very different pressures during COVID-19. It also gives you a better idea of where your property might fall when it comes to the demand for your rental home.
Investigate Amenities and Features Across Types
You've investigated across the entire market and by property type—now it's time to look at some comparable features at the property level. Take a look at similar properties in your neighborhood and assess them based on several crucial features, including:
- Parking options at the property
- The square footage of your competition
- The number of bedrooms and bathrooms
- The available amenities offered by other homes
- The condition and age of the interior and exterior.
Whether your rental property is in Englewood or Bradenton, look at what other rental property owners are charging for their properties in these areas, and compare their amenities to your own to get a clearer picture of where your pricing should be.
It's also worth considering "localized amenities" that your property might offer, such as:
- Walking distance to desirable shopping
- Nearness to a great school system
- Community features (like a pool)
- Proximity to cultural hotspots
- Beautiful beaches.
What About Your Fees?
Sometimes, when it comes down to the wire, the fees you charge can mean the difference between your property being rented or not when the competition is fierce—and comparable to your rental. In this scenario, it's worth evaluating what you charge for fees (like pet rent or a pet deposit) relative to other landlords.
If your neighbor is charging $20 a month for pet rent and you're charging $60 for a similar property, renters with pets might see this as a sign to move on.
Let the Experts in Gulf Coast Property Management Guide You
While all of this certainly sounds like a considerable amount of work to tackle if you intend to stay successful as a landlord, you're not alone!
At Gulf Coast Property Management, we've been serving property owners like you across the Sarasota and Manatee area since 2003—across every kind of economic condition imaginable. Whether its a hurricane or a virus, we're here to help you operate your rental home profitably and professionally! With that in mind, we're proud to offer the above research as one of our free services to landlords during this time to help you recover from the crisis and stay competitive.
You've got enough on your plate: leave the research to us! Get your free rental analysis below to get started.