Have you bought your first income property in Snohomish County, Washington? Or, are you thinking of relocating rather than selling your home? If so, then it might be worth knowing how to calculate the perfect rent price for your rental property.
Setting the rental price is no easy task. You have to do your due diligence first. The ideal rent price should be able to cover all your property expenses, from the repairs to the mortgage. You want to end up with a good income to cover for the time you’ve spent managing the property.
To accomplish this, you must calculate the “Goldilocks” price. That is the perfect price for rent that is neither too low nor too high.
If you set it too low, it results in less profits for you at the end of each month. Conversely, if you set it too high, you risk not getting a tenant quickly. Neither of these two scenarios is good for business.
Remember, the goal of any Snohomish County, WA landlord is to maximize rental income. Nonetheless, the temptation to max out your income by increasing the monthly rent might result in a backlash.
A sky-high rental price might scare away prospective tenants or deter them from renewing their lease. More so, if it doesn’t augur well with the prevailing market rate.
As you probably know, a rental vacancy is bad for business. It essentially means zero income at the end of the month.
Inaccurate Pricing Red Flags
If you receive lots of inquiries within the first days of listing your rental, it most likely signifies that the rental price is too low. Another sign is if you receive pressure from potential tenants to take a holding deposit.
How do you know your rental is priced too high?
A) You receive very few inquiries during the days of listing your rental.
B) You get some inquiries but no one actually comes to view the property.
C) People come to view the property but no one actually fills out the rental application form.
Factors that Affect Rental Pricing
There are a number of factors that can affect the rental rates. Generally speaking, competition is the first thing landlords should look at.
The following should be considered when focusing on comparable rentals:
• Neighborhood: You want to pay attention to properties that are located within the same neighborhood as yours. Market trends often show that prices can vary significantly depending on location. You may find that prices vary significantly depending on where they are located. Some may be considered more desirable neighborhoods than others.
• New vs. old rentals: Is your Snohomish County, Washington rental property in a newly constructed building? If so, then you may be able to charge more rent.
• Type of home: Is your home a single family or multi-family home? If it’s a single family home, then you may be able to charge a higher rent amount. Generally, single-family homes command better rental rates as compared to multifamily homes.
However, it’s also important to consider property taxes and your mortgage, as both can significantly impact your overall return. Additionally, the type of home may attract different kinds of tenants, single-family homes often appeal to long-term tenants, while multi-family properties may attract shorter-term or multiple tenants.
• Bathrooms and bedrooms: You also want to consider how many bathrooms and bedrooms comparable properties in your neighborhood have. Focus on only those that have a similar number to yours.
At this point, you may be asking – where do I look for comparable properties?
The first place to look for comparables is online. A quick search on a search engine like Google may help you get good data in this regard.
Sites like Hotpads, Trulia and Zillow can also help you view properties for rent in your area. They can also help you keep track of properties that rent quickly and those that don’t.
You may even want to do the research in person. Remember to focus on properties that compare similarly to yours. You may want to ask the respective property owners if their rentals have a high demand.
Last but not least, you want to get the opinion of a local realtor. Most realtors will have a good understanding of the ins and outs of the local real estate industry. For a small fee, they can help landlords determine how much they should rent depending on how their rental stacks up against the competition.
Adjust Price According to Amenities
Once you have a few comparable properties to work with, you then want to determine how desirable the unit is to prospective tenants. Looking at what amenities are available will help you measure a unit’s desirability and influence the price you can reasonably charge. Tenants are often willing to pay more—and commit to a longer lease—for features such as in-unit laundry, updated appliances, or proximity to public transportation.
• Does your property have a good view? Does it have, for instance, a garden view? If so, then it’s more desirable than one with a parking lot view.
• Is your property updated with the latest amenities? Does it have up-to-date hardwood floors and appliances? It is more desirable than one without.
• How much square footage does your property have? Generally speaking, a property with more square footage is more desirable than one with less square footage. A bedroom with 1,000 square feet, for example, has a better desirability score than one with 700 square feet.
• What’s the layout of your rental property? There are various types of apartment layouts. A penthouse unit may be more desirable than a railroad unit, for instance.
• How many floors does your property have? Renters are generally attracted to properties with higher floors. A walk-up is the only exception, as many people hate the idea of going up and down the stairs.
• Does your property have an extra window, balcony or closet? It may be more desirable than one without.
There you have it. Tips on how to calculate the perfect rent price for your Snohomish County, Washington rental property. Remember, the right rent price leads to profits. At a minimum, the rent you charge should be enough to cover all property expenses and leave you with profit.