How Do I Determine a Fair Rent?

Ideally, rental rates are fair and reasonable for the tenant as well as profitable for the property owner. Often, landlords determine the monthly amount based on such things as their mortgage payment, the rent that the neighbor charges, or a rate listed with a multiple listing service (MLS) or on the Internet. Unfortunately, these random rates are just a “sticker price.” The actual rental rate of the property can be up to 20 percent less. More relevant information should be used when setting a fair rental price. The rental rate is only what the market will bear, not what you think it should be.

Consider these factors before deciding on an amount:

• Rates paid by quality tenants in certified comparable properties in your area
• Condition of the property
• Upgrades to the property
• Any time limit you have to meet your obligations
• Current competition in your area
• Number of quality tenants waiting to rent a property

A reasonable market price for the location keeps vacancy rates low.  Rents are often less than a typical mortgage payment, which you would have to supplement from your cash reserves. Take the time to set the correct rent and you will enjoy fewer vacancies and higher cash flow.

For a true appraisal of the rental value of a property, Management One Property Management provides a no-cost Certified Rental Analysis (CRA) that is based on verified leased rental data for your location. This accurate information takes the guesswork out of setting your rental rate.

Be sure to read next month’s issue of PM Update to learn about the details of a Certified Rental Analysis.

	620 Newport Center Drive, 11th Floor Newport Beach, CA 92660