One of the first questions landlords and investors ask when they contact us is: how much can I rent my house for? People want to make sure they are covering their expenses and earning a profitable rental income. However, you always need to remember that it’s the market setting your rental price, not your expenses. Today, we are talking about how to price a rental property and what to consider when you’re attaching a value to that investment.
How to Determine Rental Value: Managing ExpectationsSometimes, in determining how much to rent a property for, the landlord will come to us with an accounting of the mortgage payment, taxes, and insurance, hoping to earn at least that much in rent every month. They’ll even include the HOA dues, which are often not a tenant’s responsibility. It’s important to understand that you cannot price your rental according to your own expenses without doing your homework. Your price will depend on comparable properties in the area. Instead of your expenses, you need to consider your square footage, location, and property condition.
How Much Should You Rent Your House For? Our FormulaIn Sacramento, there are different neighborhoods, so prices fluctuate. We have a lot of track homes as well as other single family homes in older neighborhoods. When you have a property in a newer development, they are easy to price because they are the same age and close to the same layout. These properties may vary in square footage, but they are still easier to price. We use a tool in our software, where we have a rent match comparison. It allows us to put in the bedroom and bath square footage and add amenities for a particular property. When that property comes up for rent, we refer to our software to see what’s happening within that zip code. We’ll also go to Zillow and Rentometer and the other online resources. If we are comparing our listing to a property within a mile, we know we can price it within $100 or so.
This is how we effectively price rental properties in the Sacramento area. If you have any questions about this or anything pertaining to property management in Folsom, Sacramento or the surrounding areas, please don’t hesitate to contact us at Residential Equity Management.