Setting the “right” rental price is crucial in getting your property leased. Comparable homes, time of year, and your ownership costs are all factors. Obviously, you have to price it to meet your goals for covering your basis costs, including mortgage payment, taxes, insurance, and leasing fees . The time of year is also very important. If it is not May through August , the peak rental market in KC, the home may have to be more aggressively priced to rent quickly. And the comparative features, quality, size and location of the house itself is the most important of all.
Pricing to the Market
Renters are most concerned with the house and alternatives on the market. For them to consider your property, it must be close to the rent of comparable rental properties in that area. There are many factors that affect what is comparable including:
• Location – quality of the school district and the specific schools nearest the home
• Location – proximity to shopping, other services and distance to their job
• Location – distance from negatives such as noisy freeways, trains, landfills, other nuisances
• Size – square feet and number of bedrooms, bathrooms, living areas, garages finished basement
• Architecture – openness, number of floors, steps, convenience, laundry facilities
• Amenities – upgraded kitchens, master suites/tub, granite, hardwoods, fireplace, deck, fence
• Condition – age, cleanliness, state of repair, curb appeal
Potential renters will evaluate all of these factors in relation to other homes that are on the market at the same time as yours. Some factors are more important to individual tenants than others, but your property needs to be within $100/month of those that are most closely comparable overall.
We will know if the price is right by the response to advertising. If we get few responses, the market perceives your price as too high. You may find a renter in this case, but it is very likely to take longer to find that one renter that values the features of your property that are better than the comps more than those less important to them.
If we do several showings, but a tenant doesn’t lease it, there is something about the home that is objectionable. It might be that it is not accurately represented in the ad or that there is just something that many renters don’t like. For example, brightly colored rooms, one or more rooms unusually small, odor in the home (especially pet smells), damp basement or other issues. You may have to address the issue in order to lease the home without a significant price reduction – and even pricing often doesn’t work if the problem is serious.
The first three factors, location, size and architecture really can’t be changed so you have to price to comparable homes. Amenities can be added and this will likely increase the potential rent. Condition is absolutely critical and is controllable – so make sure the property is in top condition to get a good price. Fix anything that is broken, paint bright colors neutral and clean everything thoroughly. Worn or dirty carpets are the most common cause for problems.
Condition is not just a factor in price and marketability. In general, renters will treat your property no better than it is presented. Deferred maintenance leads to poor care of the home, which is often more costly than making ongoing needed repairs . Houses are truly a pay-me-now or pay-me-more-later investment.
FINDING THE RIGHT BALANCE
1. Determine the rent for comparable homes. Rental Home KC has successfully leased hundreds of homes in this area. Remember, pricing a house $100 too high can easily make it take an extra month to lease, that vacancy taking away all you would have gained with the higher price. We can provide assistance in determining the rent that the market will bear.
2. Compare to your total cost of ownership – mortgage, taxes, insurance, leasing fees.
3. Find a balance that will allow you to meet your financial goals and get the house leased as soon as possible.