Setting the perfect rent price on your apartment unit may seem like a daunting, elusive task. Ask for too much and no one will be able to afford to lease your unit, resulting in vacancy that may last for months. Ask for rent that’s too low and you run the risk of attracting problematic, deadbeat tenants, which may result in good tenants leaving. Since settling on a price that runs somewhere between these two extremes is probably your best bet, here are some tips on how you can set the price that will help you attract the tenants you want.
Understand your location
Where your rental is located can greatly affect the price tag you place on an individual unit. A desirable location in an established, posh neighborhood naturally attracts tenants more willing to pay almost any asking price for the opportunity to live at that “address.” An up and coming neighborhood won’t yet have the same cache. Moreover, if your property is located near schools, grocery stores and public transportation, this added value will allow you to position your unit at a higher rental rate over a similar apartment equal in size and appearance, but without the bonus of these conveniences nearby.
Compare apples with apples
When pricing your unit, be sure to canvas the neighborhood to understand the going rental rates of similar units in your area. Search for “like” properties with similar amenities. If your property provides a gym and balconies on upper floors, only compare it to the rental rates of other properties with comparable features. If you are not careful in your search, you’ll either greatly undervalue or mistakenly over-price your units. Furthermore, if your rental properties include newly renovated kitchens with stainless steel appliances (for example!), be sure to ask probing questions when evaluating competitive, newer-looking properties. These seemingly newer facilities may not actually be all they seem if they contain older, inexpensive appliances. Outside appearances can be deceiving!
Know the Market
Recognizing multi-unit rental market trends will further improve your accuracy when setting rental rates on your apartment units. If the economy is doing well, you can more easily increase your unit’s price and still attract new tenants. If the economy is heading towards a downward trend, consider lowering your price even temporarily to avoid those vacancies. Remember – an occupied unit is by far more profitable than a vacant unit, even at a discount!
Certain seasons, such as late spring and late summer see increased rental activity for various reasons from school registration to available job opportunities. By understanding which factors or cyclic trends affect your neighborhood and targeting your marketing efforts accordingly during such high-volatility months, you can predict possible vacancies and act quickly to appeal to renters with the best – and most profitable! – rental prices in mind.