Renting out a house can provide a main source of income or an excellent way to supplement your income and it can also be a profitable investment for the future. The amount that your property will rent for will depend on a number of factors, but you can determine a fair and profitable amount with the help of experienced property managers in Fort Collins.
If you are wondering how much rent you can charge for your property, here is additional information on the factors that help to determine the rent rate of a home.
How Can You Determine How Much to Charge for Rent?
Choosing the right rental price is important because you need an amount that will not only cover the expenses of the property but will also provide you with a profit. In order to get your property rented, the rent must also be fair and competitive for the current market. With the right price, you can check all the boxes and help you make the most of your investment.
1. Start By Calculating the Monthly Expenses of the Property
Before you consider the amount you can profit, you must first be sure that the amount you charge for rent covers the expenses of the home. Take the time to determine the base amount you need to cover the cost of the mortgage, insurance, taxes, maintenance, property management fees, and other monthly expenses. Calculating this amount will help to ensure that you break even, from there you can adjust the amount for other factors and profit.
2. Research Comparable Properties in the Area
The state of the rental market for your area plays a significant role in helping you decide how much you can charge for rent. Take the time to look up listings for homes that are similar in size, amenities, and location to give you a good starting point. You can lower or raise the amount as you compare what your property has to offer in comparison, but you can also use this number as a way to gauge if your final number will be able to compete in the current market.
3. Use a Percentage of the Home Value and Mortgage Amount
If you know the estimated mortgage value of your property, you may be able to determine a fair amount using some simple calculations. In some circumstances, a fair rent amount is the equivalent of one percent of the mortgage or home value. For example, a property worth $100,000 could charge a monthly rent of $1000. This calculation does not take into account the condition, features, or location of the home, however, so it’s important to have some flexibility with that number so that you can make the most from your rental and not hurt your chances of getting it rented.
4. Look at Your Location
The location of your rental is one of the biggest factors that comes into play in setting the right rental rate. Certain areas of your city will carry a higher value such as close to downtown or in a desirable neighborhood. Other aspects of location can also be used such as proximity to schools, entertainment, shopping, or convenient access to major streets or highways. Homes in prime locations are able to charge higher rent, while those in less desirable areas will not be able to do the same.
5. Add From the Amenities and Features of the Home
Apart from location, the features of the home itself will affect how much your property will rent for. Property managers have lengthy experience in setting a monetary value to all that your property has to offer.
Property features that could affect rent price include:
- Square footage
- Number of bedrooms and bathrooms
- Upgrades such as appliances, countertops, flooring, or more
- Renovations to the kitchen or bathrooms
- Yard size
- Laundry availability
- Community amenities such as a swimming pool or fitness center
- Storage space
- Air conditioning
- Open floor plans
- Smart technology
- If pets are allowed
For help in determining the right rent amount for your property, contact All Property Services. As trusted property managers, we have extensive experience in the current market to help you remain competitive and profitable. Contact us today for more information.