Before I ever bought a property, I thought that my landlords set the rent through some type of irrefutable science. I never questioned how they came up with the numbers. I took it as a given: The sky is blue, the grass is green, and that 3/2 on Irwin Street is $1,550 a month.
As a landlord, I now know that pricing your rentals is part research, part guesswork. Fixtures, layout, square footage, view, amenities — these variables make figuring out the ideal rental price an art, rather than a strict formula.
Here are some of the ways I determine the rental prices for my units. (Hint: It’s a lot of trial-and-error!)
- Craigslist. Craigslist is my best friend when I’m buying a new property or trying to fill a vacancy. Just set the search criteria, such as the number of bedrooms, and search using keywords that anyone looking for a rental in your neighborhood would use. “4-bedroom in Smyrna.” “2-bedroom in Decatur.” You can instantly see what the competition is charging. Lately I’ve been further narrowing my search through more specific keyword phrases like “walking distance to X” or “rent includes water and trash.”
- Zillow, Trulia, Redfin. If you’re an agent or you have direct access to the MLS, look there. If you don’t, check out the websites that reflect similar data — Zillow, Redfin, Trulia and others. You’ll see a broad cross-section of listings — some of which will repeat the Craigslist rentals, and some of which won’t.
- Signs! Yard signs are one of the most underrated ways to scout a neighborhood. Most will list only basic information: the number of bedrooms and bathrooms, the rent, and a phone number. You won’t see pictures of the interior, but a glance at the exterior will give you a generally decent idea of the property’s condition.
- Market Demand / Seasonality. I’ll admit, I charge higher prices for vacancies that come on the market during the months of March through August, when there’s lots of turnover in my area (and plenty of prospective tenants are filling my Inbox). I’ll ask for a lower sticker price in December, when units are tougher to fill. That schedule is location-specific, of course. In my former college town, the rental schedule was very different: move-ins peaked in August and again in January, and move-outs/sublet availability peaked in May.
- Updates. Ah, the four words that will make a listing shine: “granite and stainless steel.” As a general rule, I’ll raise the rent by $100/mo as compared to a similar unit with white appliances and laminate countertops. Don’t just copy my lead, though — real estate is the most local business on earth.
- Moving Target. I’ve occasionally asked for rent that was too far off base, but I learned my lesson quickly when no one responded to the ad. (Conversely, I once priced a unit too low, my Inbox flooded with replies, and the first person who toured the unit wrote me a deposit check on the spot.) In some regards, the rent is a moving target, a trial-and-error experiment — I test a price for a few days, and adjust it based on the feedback.
Rent is certainly not the unquestionable number that I once imagined it to be. Setting rent is far more of an art than a science.
How do you set the rent?
Photo: Doug Waldron