Calculating an appropriate rent price can be challenging for most landlords and property owners. A property’s rent tends to have a significant impact on its performance in the market and can make a big difference when it comes to maximizing your ROI and minimizing property vacancy rates.
To calculate the right rent price for your property, there are some considerations that you should take into account. It is paramount that you understand the trends in your local real estate market so you can make an informed decision!
In this article, MTD Property Management has prepared a list of some of the steps you can take before setting a rent price for your Chicago home.
Find Comparable Properties
A comparable property can be described as one which is similar to your property in terms of the facilities and amenities it provides. Ideally, comparable properties should be located as close as possible to your property with due consideration provided to the following factors:
Neighborhood
The
neighborhood where a property is located has an impact on rent prices mainly due to rental unit demand. Properties in neighborhoods that are considered desirable by renters tend to command a higher price than their counterparts in other areas.
Property Size
It is important to identify a comparable property of a similar size to your rental unit.
The size of a property can be determined by its square footage or by the number of bedrooms and bathrooms.
Property Age
In most cases, properties that were constructed recently
attract more tenants than older properties. You should therefore find a property that is similar in age to yours.
Number of Units
Do you own a single-family or multi-family property? More often than not, single-family properties fetch higher rent prices than multi-family properties. Single-family homes also tend to have more space and additional facilities such as a garage and storage space.
Where Can You Find Comparable Properties?
Online Platforms
Like most other commodities, you can find the information you need on comparable properties on various websites such as Zillow, Hotpads and Trulia. Online listings provide all the information you need about a property including its location, square footage, number of rooms and rent price.
You can monitor the performance of these properties by observing how long they have been on the market and if there have been any changes made to the price.
In-Person
Alternately, you could take a walk around your neighborhood and identify properties that are similar to yours. You can then reach out to the property owner or manager to inquire about the details of the property and the rent prices.
A Property Management Company
Property management companies have a wealth of information on properties in different neighborhoods.
Find a reputable property management company with rental units in your area and request a consultation. They can then provide an accurate assessment of your property and advise you on the appropriate rent price.
Adjust Rent Price Based on Amenities
Once you have identified and selected a comparable property, you can make necessary adjustments to the amenities available. One of the fundamental rules to remember as a property owner is that no two properties are exactly the same.
You are bound to come across some differences between your property and others, and this should be reflected in the rent price you set. The availability or absence of some amenities will have an impact on the property’s rent price.
Some of these amenities include:
Square Footage
A property with a large amount of space is more desirable than a smaller property. A property with greater square footage, therefore, commands higher rent and this should be reflected in your pricing.
Property Upgrades
Have you spent time and capital renovating your property? Property upgrades such as an
updated kitchen, new flooring and new appliances often attract prospective tenants. You can raise the rent price to reflect these amenities and help you recover the costs incurred during renovations and property updates.
Floor Levels
In multi-family properties, units on different floors may have different rent prices. In most cases, high-level units tend to command a greater price than low-level ones due to their desirability.
However, if your property does not have an elevator, the units on the higher floors might be less desirable because most people are unwilling to take the stairs.
Unobstructed Views
Does your property have a view of a park, the city’s skyline or the sunrise and sunset? Having a view can significantly improve the desirability of your property and subsequently, its value. A property with a view usually commands a higher rent price than a property without one.
Additional Property Features
When adjusting rent prices, keep an eye out for additional features that renters might find attractive. Examples of these include built-in wardrobes, balconies, patios, extra windows, or an open floor plan. These features help to distinguish your property from the others in the neighborhood and attract prospective tenants.
Set Your Rental Price According to Market Demand
Even though amenities play a significant role in determining rental prices, it is important to keep up with market changes and adjust rent accordingly. Population changes and shifts in income levels greatly influence rental markets.
Changes in the real estate
market affect people’s purchasing power and may have an impact on the available tenant pool. For example, if the economy is facing a downturn, fewer people will be able to live in high-end apartments and will likely move to more affordable units, thereby causing a shift in rental unit demand.
As a result, the owners of high-end apartments may be forced to lower their rent prices whereas the more affordable units might raise their rent due to increased demand.
You should therefore keep track of the economic trends in your area to ensure your property remains competitive in the rental market.
Conclusion
Whether you're
renting out your home or another investment property, decisions about rent prices for your property should be made continuously. By consistently adjusting your rent prices to accommodate market demand, you gain a competitive edge over other properties in your neighborhood.
At
MTD Property Management, we have a comprehensive knowledge of the rental market in Chicago and can help your property stand out from the competition! Contact us today to access our premier property management services.
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