How do I figure out the best rental price for a unit?

[Felix Sharpe]

Hello all,

My question is simple - what methods should I use to determine the best price point for a unit? I've researched apartments.com and have called area apartments to determine rate ranges. Just wondering if there is anything else I should do. This is my first property and the first time I'm attempting to price a unit.

Thanks,

Felix

[Dana Dunford]

@Felix Sharpe-- Here is my strategy ... a combination of the below approaches:

(1) Market Approach: Review rental prices of comparable properties currently listed on the market. (Craigslist, Zillow, etc.)

(2) Growth Approach: For properties rented historically, use the initial rental rate and apply your county's annual growth rate.

(3) Data-driven Approach: Online tools, such as the Rent Zestimate, use large amounts of data to determine price. These tools are not always accurate, but they provide a baseline to compare with the other two approaches.

If you have too many candidates, then you are pricing your property too low. If you have too few candidates, then you may be pricing your property too high (may because some people don’t properly advertise their property.) 

Also, it's easier to list your property above market rate and reduce the price than it is to increase an underpriced unit.