You’ve calculated all your expenses, and need a positive cash flow. You’ve arrived at a number that you believe is reasonable to charge for renting your property.
However, if you’ve priced your rent too low, you lose revenue. If the "rent is too darn high”, your property will sit vacant, costing you money and not generating any income. A high rent can scare off future tenants, especially if it doesn’t fit the neighborhood. And a low rent may signal to prospective tenants that your property or their neighbors do not meet the standard they are seeking in a building or community.
So how do you know you’ve priced your rent too high?
You might get calls and inquiries, but not one comes to view the property. At showings, no one completes an application.
Or, you may have no inquiries at all for several days after you’ve listed it. Since prospective renters are usually on the lookout for new listings, having your rental sit for a few days and then reducing the price could make it seem stale, or raise questions.
You might also have priced your rent too low if you have a flood of inquiries within a day of listing, and multiple applicants want you to take a holding deposit.
Pricing is affected by many factors, including size of the unit, number of bedrooms and bathrooms, location, proximity to schools and transportation, square footage, the time of year, and amenities such as onsite laundry, parking, and appliances.
How do you know the best price for your rental listing? Do your research and check out the market in your area. For starters, use the rent rate analysis on MyRentRates.com. You can check a specific address, or a metropolitan area. MyRentRates will also tell you the expected income of a tenant for your price, and email you when there is a change in your market.
You can compare listing data on other sites, but be aware that there is a tremendous difference between listing prices and actual rental prices.
Many landlords also work locally with a realtor who has rental experience or a network of fellow landlords. This can be helpful in comparing your property and amenities with others in the immediate area, and confirming a realistic, targeted idea of price.