Key Takeaways
- Avoid Underpricing or Overpricing Your Rental - Setting the right rental price is critical for maximizing ROI. Striking the right balance ensures steady income and keeps your property competitive in the Houston market.
- Use Data-Driven Methods to Set Rent - Several strategies can help landlords determine an accurate rental price, including using a percentage of the property’s value, researching comparable rentals in the area, and calculating rent per square foot.
- Partnering with a Property Management Company Adds Value - Enlisting the help of a local property management company can be invaluable. Professionals bring market expertise, ensure optimal pricing, and manage day-to-day operations, ultimately improving occupancy rates and financial performance.
As a landlord, there are certain things that you’ll need to get right to become successful. And among these is knowing how to price your Houston home to rent correctly. First-time landlords often make the mistake of undercharging or overcharging tenants. Resultantly, their ROI suffers.
When you undercharge tenants, you may struggle to pay the expenses. Overcharging tenants is equally bad for the ROI. This is because your property may become unattractive to prospective tenants, leading to significant vacancy costs.
With that in mind, we at Propertycare Property Management have put together the top tips on how to price your Houston home to rent correctly!
Use Your Property’s Value
You can use the value of your rental property to determine the potential rent amount to charge. Specifically, calculate 1.1% of your Houston property value. For instance, if its value is $100,000, the amount you could charge Houston tenants in rent each month would be $1,100.
Keep in mind, however, that this should simply be a guideline. There are other factors that you should consider before arriving at the correct calculation including:
- The Property’s Location - The more desirable a location is, the higher rent you can ask and vice versa.
- Special Features - Examples of highly sought-after amenities include in-unit laundry, high-speed internet, air conditioning, and parking.
Another factor to consider is the prevailing rental market conditions. If the property is located in a competitive environment, you’ll not want to set it too high as this could result in longer vacancy periods.
Look at the Rent Price for Comparable Units
This is another option you could consider when trying to price your Houston home to rent. Simply research what comparable properties in the area are charging. When doing so, the units must match in terms of square footage, number of bedrooms and bathrooms, location, and amenities. This ensure a more accurate price estimate.
The quickest way to conduct this research is by searching online. Use reputable rental listing sites and the filters provided to narrow down to properties that match yours. You can also go to property showings in person for a chance to view comparable units and speak directly with other landlords to gauge rent prices.
Determine the Rent per Square Foot
This is especially helpful if you are having difficulty finding similarly sized units in your area. With a simply formula, you can compare rental properties, regardless of their sizes. To find out what to charge per square foot, simply divide the rent amount by the property’s square footage.
Consider Other Factors
While the methods mentioned about can give you a ballpark figure to work with, you’ll also need to consider other factors as well. They include the following:
Location
Your property’s location is the single most important factor that will have a huge impact on the rental price. A good location can mean you can charge higher rent and have minimal vacancies. A property’s location also determines the kind of tenant you’ll attract. That’s why it’s important for landlords to know their target renter type early on in their investment journey.
Property Features and Neighborhood Amenities
A good combination of in-unit features and community amenities can make a huge impact on how much rent you can charge.
Examples of desirable home features include air conditioning, high-speed internet, outdoor spaces, and modern appliances. When it comes to community amenities, good examples include parks, restaurants, essential services, and entertainment hubs.
Rental Upgrades
How desirable your Houston rental property looks will impact the rental price. If it has features that look like they have seen better days, you won’t be able to charge much rent.
On the other hand, if your property features desirable features, you may be able to charge a higher rent. You’ll even have an easier time attracting and retaining a quality tenant with diligent property renovations. Examples of desirable rental features include ample storage spaces, stainless steel appliances, a pet-friendly policy, dedicated parking, and safety features.
Work with a Property Management Company
Working with a reputable property management company can make all the difference to your bottom line, regardless of whether you’re just starting out or are a seasoned investor with dozens of rentals across Texas.
A property manager can help you handle every aspect of your property’s management from determining the perfect rental amount and screening prospective tenants, to collecting rent, and everything in between. With dedicated experts on your side, you and rest easy knowing that your property is well cared for.
Bottom Line
Establishing an accurate rental price helps maximize your return on investment and minimize vacancy and turnover rates. With the strategies listed about, property owners can more confidently price their rentals.
Propertycare Property Management can also help you determine the perfect rental price for your rental property. We have a skilled team of experienced and knowledgeable property managers who know the Houston area inside-out. Let us help you realize your goals of financial freedom. Get in touch with us to learn more!