The rental market is constantly changing. There are several factors which affect the pricing of any rental property. This post will discuss the most common factors affecting rental rates and pricing of a rental property along with days on market. If you want to hear even more detail, watch my video above.
Location, Location, Location
This is the most important factor affecting rental rates for an investment property and real estate in general. The location of a property will immediately establish a baseline rental rate, overall demand and your target market. It will also be a large factor in other investment factors such as appreciation/depreciation and days on market. Location can be as broad as an entire city or as specific as a street or block.
Number of Bedrooms
Rents will generally correlate with the number of bedrooms offered in each rental unit. What this means is – in most circumstances – a similar 1 bedroom will lease for less than a 2 bedroom in the same market. Or a 2 bedroom will rent for less than a 3 bedroom and so on. Within each market there is a range of typical rent amounts you can expect for each unit size. Having an extra bathroom, more square footage or other amenities that other units do not offer will normally increase the amount of rent you can expect to receive. For example, an extra bathroom can add $50-$100/mo to the rental rates in most markets we serve.
Appliances and Other Amenities
Each rental market and submarket will have baseline tenant expectations for what is generally included with rent or what the tenant preferences are for the market. Two factors which tenants frequently ask about are Dishwashers and access to laundry facilities. The more amenities your property has the more you can expect in rent. However, some amenities are very common in certain areas and if you don’t have them it can hurt your rental rates.
Pet ownership is on the rise and a significant portion of the renter pool already have pets. Estimates show that about 50% of renters have pets. Allowing pets in your rental can reduce your days on market and usually will increase your monthly rent by adding a monthly pet fee. Still unsure? Check out our blog about Weighing the Pro’s and Cons of Allowing Pets at Your Rental.
Curb Appeal and Condition
An attractive property will attract more and better tenants. A property that looks run-down and neglected will have longer days on market and probably lease for less than a similar one that is well-maintained.
To Sum It Up
At the end of the day rental rates are determined by expectations and expectations are established by the consumer. Knowing your target market (consumer) and their expectations is vital in order to maximize the rental rate on your property!
Again, for more detail about the factors affecting rental rates, watch my video above!