What should my rent rate be? It’s a question asked often by multifamily property owners, especially those just breaking into the game for the first time. Of course, you want to price it so that you achieve the greatest amount of profit; but it has to be done strategically so as not to price you out of the market.
Here are 5 considerations that will help you achieve that delicate balance between a rent rate that is too high or too low:
- Location—We all know location is everything. This is especially true when it comes to pricing. People are simply willing to pay a bit more to get a home with proximity to the places they frequent. This typically includes metropolitan areas, such as downtown areas, as well as restaurant rows and shopping.
- Competition—What is your competition like and what do they charge? Now, remember, that you must have comparable properties to use this as a guide, but using those that are, in your same area, is a good way to determine ranges. This, of course, applies only if the property you’re comparing to is well-occupied. (If it’s not, then there’s something wrong and it is no standard by which to do business.)
- Property condition—Ask yourself honestly: are people going to think you’re crazy for asking the price you’re considering given the condition of the property? If it’s an older property without much in the way of modern aesthetics, then you likely don’t have as much invested and can offer a more modest price. If, on the other hand, it’s a new property or all the upgrades have been made to compete with nicer complexes in the area, asking a higher price is expected.
- Amenities and extras—Tenants will also often be willing to pay more for amenities. This is especially true of Wi-Fi services, pools, and fitness rooms or gym memberships. Consider what you have to offer in comparison with the competition. Similar amenities = similar pricing structure, all else being the same.
- Utilities—Are you an all-bills-paid property? If so, then charging a bit more than comparable properties that do not offer such a perk is perfectly acceptable, all else being the same.
Need some additional help making sure your property is priced for achieving total occupancy? Call the professionals at Class A Management today. You can reach us at 817-295-5959 or by email at info@classamgmt.com.