When deciding to list your home as a rental property, deciding on a listing price can be a very important part of that decision. While it’s important to consider your mortgage payment and all other costs associated with the home, you will also need to think of the cost of vacancy and turnover. Keep in mind that many homeowners, especially those with high mortgages, will not make a profit for the first few years.
There are many factors that will directly affect your homes rental value and the first step is to look at comparable homes in your area. Focus on rentals that are as similar to yours as possible and consider the following:
- Neighborhood: the area in which your home is located plays a huge role in determining value as a highly desirable neighborhood will bring in a much higher rental rate than a similar home in a less popular area of town
- Size: you will want to look at rentals that are similar in size with the same number of bedrooms and bathrooms
- New Construction vs. Old: many renters are willing to pay a little more for a newer construction property as the amenities that are often higher end
- Amenities: renters will often consider the amenities below when looking for a rental property
- Updates: newer kitchens and baths with high-end appliances as well as hardwood floors are more desirable than units without
- Square Footage: the size of your home will play a big part in the value
- Layout: open floorplans are more sought after than more traditional homes. Also, a 3rd bedroom in the basement is not as desirable as having all three bedrooms above ground level
- Bonus Features: amenities such as decks and a fenced yard or finished basements bring higher rental rates than a home without
Are you getting enough interest in your listing? If not, you need to reconsider the price as a lack of leads is almost always related to price. Once you’ve determined your initial listing price, you’ll need to remain flexible and consider market fluctuations, the overall economy, and supply & demand in your area. A low economy may bring more renters to the market as homeownership becomes more difficult. However, a huge supply of rental on the market will give prospective renters more options and room for negotiations.
The leasing team at Bay Management Group takes time to consider all of these factors when recommending a listing price for our owners. We use a variety of industry websites to compare rentals as well as our extensive knowledge of the market. With properties listed all over the Baltimore Metro area and surrounding counties, we are constantly watching the markets and work with owners to find quality tenants at the best possible rental rate while also trying to minimize vacancy time and turnover costs.