Rental rates are determined by many factors. A rental rate analysis begins by gathering current listings and historical listing data. Homes that are active on the market, as well as those leased within the last year all play into your rental property’s rent price. This data can be collected from multiple sources but typically Multiple Listing Service (MLS) is the most accurate as it shows both the asking and leased price.
Lindsay Leasing – Rental Rates
Lindsay Leasing will provide a Comparable Market Analysis (CMA) providing price per square foot, days on market, asking price, leased price and more. Each time your home comes up for rent, we will perform a market analysis to determine how much homes similar to yours have been renting for recently. Once we determine a starting value, we add or subtract based on the time of year, competition from other available rental homes near yours, the condition of the property (older vs. newer carpet, age of appliances, floor plan, etc.), and other relevant market factors.
As a general rule, we believe it’s a good idea set your rental rate at market value and rent quickly. Savvy tenants conduct research or utilize a Realtor to help price rentals so they are armed with actual rental rates. They know if a property is priced above or below market. Vacancy is your worst enemy and we work hard to prevent excess vacancy loss. Vacancies can occur before a lease or in-between leases if a renewal rate forces the existing tenant to move. It is much more cost-effective to keep an existing tenant than find a new one due to commissions and vacancy between tenants.
When establishing rental rates we recommend pricing at market. When setting a rental rate above market you should calculate your upside and downside scenario to determine if it makes good business sense. The potential upside is the difference in rent between market and asking. For example, if market rent is $1200 and you decide to price at $1300, then the potential upside is $1200 ($100 x 12 months). If a property rents at the higher price in the same amount of time it would have rented at market price you’d earn $1200 extra. For the downside, if a property eventually leases at market rate, which is what happens most often, it will cost you approximately $40 per day for every day the property sits had it been listed at market rate. This is in addition to utilities that you pay until a tenant moves-in.