Are you ready to lease out your Raleigh home? One of the key decisions that you’ll have to make is the amount that you lease the property for. The rental pricing will determine the viability of the rental business.
Most new landlords have little knowledge of the local property market and tend to set the price either too low or high. If you set the rental price too low, you’ll lure in tenants but be unable to meet property costs and make a profit.
On the flip side, you’ll probably chase away any potential tenants when the rental pricing is higher than the market rate.
From our experience in the Raleigh property industry, we’ve been able to deduce several methods to guide you on how to determine an appropriate rental price for your property.
Rental Pricing Factors
Before we go into the methods of deducing rental pricing, let’s first look into the factors that will guide your investment.
Location
You’ve probably heard the mantra, ‘location, location, location.’ This line is reiterated time and time again due to the fixed nature of a property. A good property location is one that is easily accessible to amenities and services in the neighborhood.
Your renter most likely knows this. They’ll be looking for a rental property that’s close to amenities such as transportation, recreational parks, and shopping districts.
When considering location, you must also consider your target demographic. Professionals would consider a location close to the downtown area, students closer to the university, and families would typically prioritize rental units close to schools and recreational areas.
Amenities and Services
The key to attracting a renter is convenience. Tenants are lured in by what the property offers.
Most landlords focus on services that are controlled by external or third-party entities and forget about the services and amenities that they can provide.
Some of the convenient services and amenities that you can provide for your tenants include in-unit laundry, outdoor spaces, or tenant parking space.
Demand and Desirability of the Property
So, what are the features that a potential tenant will be looking for in the property?
- The size of the rental unit: Tenants will be looking at the size of the bedrooms as well as the total lettable space.
- The type of appliances: Do you have a dishwasher in the unit? Apart from the range of appliances, the condition of said appliances will also play a big role.
- The floor level: If your rental unit is in an apartment building, the floor level will be a factor in the asking rental price.
- Storage space: Tenants with children will be willing to pay more for extra storage space.
Economic Conditions
The performance of the property market is directly correlated to the state of the economy.
A good example of this is during the Covid-19 pandemic. Due to the nature of the pandemic, many businesses were brought down to a standstill. Without a source of income, many were unable to meet their economic obligations.
The rental price that you offer should be cognizant of the economy.
Methods of Calculating Your Raleigh Rental Price
The following methods can be used to obtain the best price possible for your Raleigh property:
Use the Value of Your Property
To use this method, you’re going to use 1.1% of the property’s value to calculate the monthly rent. If you’ve done an appraisal of the property recently, you can use the market value cited by the appraiser. Multiply the value of the property by 1.1% to obtain your monthly rent.
For example, if the property value is $400,000, you should charge $4,400 for your monthly rent. While it’s a straightforward method, it comes with its own challenges and limitations. It fails to consider the unique nature of the property, such as its location, design features, or nearby amenities.
Hire a Property Manager
One of the most appropriate methods of rental pricing is relying on the expertise and experience of a property manager. Thanks to their experience in the industry, they’ll be able to effectively and accurately determine your rental pricing.
If you’re looking to lease your Raleigh home, you can rely on the professional expertise of Keyrenter Raleigh. We use our intimate knowledge of the area to set the best price possible for your rental unit.
Research Comparable Property
As discussed above, the property market is directly correlated to the state of the economy. By researching comparable units in your neighborhood, you’ll get a good feel of what your competitors are leasing their property for.
You might choose to either physically look around for rentals in the area or look them up via rental sites such as Zillow. When assessing properties, make sure to consider the number of bedrooms and bathrooms, amenities, square footage, and also the location.
Use the Rent/Square Foot
If you’re having difficulty finding comparable properties in the area, it might be ideal to consider rent/square foot.
Let’s say you’ve found a 2,000-square-foot property in the area renting at $1,500 per month. While it’s bigger than yours it offers similar amenities and is in the same neighborhood.
Finding the price per square foot would be: $1,500/ 2,000= $0.75 per square foot. You can use this metric to calculate your rental pricing.
Conclusion
Rental pricing requires that you have intimate knowledge of the market and also the factors that influence property prices. You might also need some mathematical skills to calculate the value and the pricing of the property per square foot.
Do you feel as though you are out of your depth? Why not partner with the leading service provider in Raleigh, Keyrenter Raleigh?
What we offer you as a full-service property management company is a comprehensive property management solution without the stress of doing it yourself. With us as your property partner, you can rest assured that your property is being handled by the best professionals in the area!