Tips for Choosing the Best Price for a Rental Property

Filed under: Temecula Real Estate

Rental prices are changing each year, especially with all of the movement that is happening in the real estate industry. As a property owner, you want to maximize investment income while also ensuring that your rental is occupied as much as possible. The right price point can help you achieve both of these goals.

Rental Price Point: What to Consider

How much money will you be missing out for every month the rental sits empty? For example, if your rental is priced at $3,000 per month and you don’t have a renter for one month, then divide $3,000 by 12 to see the impact: $3000 / 12 = $250.

We do this calculation to see how much you could have lowered the rental price in order to keep rentals in the unit all year long. If you would have found a renter immediately at a lower price point (compared to a higher rent price but the property sitting empty for a month), then it means that your break-even point over a year is $250 less per month: $2,750 per month.

The overall financial picture makes sense: it’s better to get a renter to move in with a slightly reduced price instead of having the unit sit empty for a month or two (or more!). Even though it’s ideal to have a renter at a premium price, you need to weigh the risks and rewards.

Tips for Rental Prices

Here are a few things to consider when choosing the rental price:

  • Look at the Market: Scroll through other comparable rentals in the area to see where the price points are averaging.
  • Consider Your Mortgage: Look at your monthly mortgage costs and try to cover these expenses. But keep in mind that other properties in the area might have a lower interest rate and payment, which means they can charge less.
  • Show the Benefits: Many renters are willing to pay a little more if they can see the value in available property upgrades. Showcase great views, natural lighting, and any recent renovations. Also, share information about local shopping, restaurants, schools, etc.
  • Focus on Long Term Renters: Even though there is a market of people who are looking for temporary housing, the best option is to find renters who will stay there for at least a few years. For example, a family with kids is a great solution because parents like to maintain consistency with the children’s schooling. Or, an older couple who wants to live close to their adult children and grandchildren.

If you need professional insights about your rental pricing, reach out to me any time. Our team at Properties Direct offers full-service real estate solutions. Send me a text or call (951) 473-0390. Email at [email protected].