When it comes to renting your property, one of the most important topics you’ll encounter is market rent. As property owners, it’s essential to have a clear understanding of what this term means—and just as crucial, what it doesn’t mean. At Access Property Management, we often get questions around how we set rental rates and whether or not owners can dictate those rates. In this post, we’ll walk you through the essentials of market rent and give you the insights you need to make informed decisions about your rental property.
What Market Rent Is Not
First things first: market rent is not a reflection of your personal expenses. You may be tempted to take your mortgage, taxes, insurance, maintenance costs, and management fees, add them up, and tack on a profit margin. But while this formula might help you determine whether or not renting is a smart financial move, it won’t give you a true market rent figure.
Another common mistake is relying on listed properties as a guide for market rent. While active listings can get you in the ballpark, they’re not reliable indicators of the final rental price. Think of it like selling a home: the real value is determined by sold properties, not the ones still on the market. Similarly, you should base rental prices on signed leases, not active listings.
Finally, don’t take rental estimates from just anyone. Sometimes, realtors or other well-meaning professionals might throw out a rental figure without the experience to back it up. Always seek advice from someone who deals in rental properties daily and understands the nuances of your local market.
What Is Market Rent?
So, what exactly is market rent? Simply put, it’s the amount agreed upon in a signed lease between you and a tenant. This figure is the truest reflection of what renters in your area are willing to pay. And just like the housing market, market rent changes—it fluctuates with the seasons and economic conditions. For example, in Michigan, rents tend to peak in the spring and summer, while winter months typically see lower rates.
How Access Property Management Sets Rental Rates
At Access, we use a combination of data points to determine the right rental price for your property:
- Active listings: While not the final word on market rent, they help us stay competitive.
- Historical data: We rely on the properties we manage (or have managed) to provide the best indicators of achievable lease rates.
Once your property is listed, we actively monitor its performance. Every seven to ten days, we assess whether adjustments are needed based on key metrics like inquiries, showings, and applications. If interest is low, we adjust the price slightly to keep it competitive and visible to prospective tenants.
Can Owners Set the Rental Price?
The short answer is no. While we value your input and understand your financial goals, setting the rental price too high can result in longer vacancies. In fact, if your property sits vacant for over a month in the summer or more than 45-60 days in the winter, it’s a red flag that your price is too high. Pricing a property appropriately from the start is essential to avoid lost income and to keep the property active and attractive to potential renters.
Overpricing also opens the door to scammers, who are quick to post fake ads with your property at a lower price, confusing potential tenants and making the process more difficult for everyone involved.
Why Trust the Experts?
Our job is to ensure your property rents quickly and at the highest market rate possible. Allowing us to follow our proven process protects both your investment and our reputation. Overpricing properties leads to extended vacancies, which hurts your bottom line and can make it seem like we aren’t doing our job.
The Bottom Line
Understanding market rent is crucial to renting your property successfully. It’s not based on your expenses or wishful thinking—it’s determined by the market. Trust the process, and we’ll help you secure the highest possible rent for your property, without extended vacancies or other pitfalls.
Have more questions or want to chat with us about your property? We’re always here to help. Fill out the contact form on our website, and we’ll get back to you in no time!