The Best Strategies for Setting Rental Prices

Filed under: Temecula Real Estate

If you own investment properties, then setting the right rental price is an essential decision to maximizing your profitability. It’s no surprise that rental prices are increasing every year, especially with the increase in demand for real estate in our area.

Don’t Miss Out on Rent Because Your Unit is Empty

While it’s important to optimize your rent prices, be careful about going too high. If the rental sits empty, think about how much money you will be missing out on. As an example, you’ve priced your rental at $3,000 per month. If one month goes by without a renter, then you can calculate it at $3,000 divided by 12 months = $250 loss per month overall.

This math is helpful in showing you how much you could lower the rental price to make sure that you are keeping renters in the unit. If you set the price at $2,750 per month ($250 lower than the original $3,000 price), then you have reached your break-even point.

Think about this: it’s better to have a renter living in the unit at a slightly lower rental price instead of having the unit sit empty for 1 month, 2 months, or even longer! Yes, it’s ideal to have renters paying premium prices. But you need to consider both the risks and rewards.

How to Set Your Rental Prices

Here are a few of the most important things you should think about when you are choosing how to price your rentals:

  • Local Market Trends: Look at comparable rentals to see current pricing.
  • Mortgage Costs: How much are you spending each month on the mortgage? Try to set a rental price that will cover your mortgage payments at a minimum. But sometimes the rent might be slightly lower than the mortgage if other properties are more competitive in pricing because they have lower interest rates.
  • Highlight Property Benefits: Renters will be motivated to pay more if they understand the additional benefits or value of your rental unit. In the rental listing, highlight the property’s best features, such as natural lighting, scenic views, upgrades and renovations, etc.
  • Prioritize Long-Term: Whenever possible, only rent to people who are planning to stay a while. Even though there is a market for temporary housing, it could cost you money overall if you have gaps between renters.

For more information and personalized recommendations, feel free to contact me anytime. At Elite Properties Direct, we offer the full-service real estate solutions that you need. Send me a text or call (951) 473-0390. Email at [email protected].