It’s critical to set an appropriate rental rate for your property when you decide to rent it out. The best offer will entice potential tenants while also providing you with enough cash flow to successfully manage the property.
Successfully pricing your rental property in Metro Detroit is crucial. You can't undervalue the property because it will result in a poorer return on your investment. So, it will be more difficult to raise the rent in the future in line with the Metro Detroit real economy.
But you shouldn’t overcharge for it either, as it will make it difficult to locate qualified renters. You could also experience prolonged vacancy periods, which will be worse for your ROI and profit margins.
To set competitive price for your investment property, you must have a thorough awareness of the Metro Detroit rental market and be prepared to adjust your asking price when necessary.
At Nelson Property Management, we know the strategies you can use to make sure your rental home is priced fairly and still get the most suitable tenants.
Analyze the Market to Determine the Appropriate Rent
Researching the market is perhaps one of the most crucial tasks to complete before making a final decision on the price and ensuring your property is rent ready. Your focus should be on rentals that are similar to yours and consider the following factors:
Local Area
Analyze homes in the same area as your home. The best value might be found by examining properties close to where your investment is located. The justification is that rates can vary widely – even from street to street. Payment rates increase in direct proportion to how attractive the Metro Detroit neighborhood is.
Property of Amenities
How many bathrooms and bedrooms are there? Compare homes that are the same size as your own property.
Type of Construction
Do they consist of one or many units? As, unlike multifamily buildings, single-family properties are usually more costly.
Age of the Construction
With newly erected buildings, prospective renters are more likely to rent and spend more on a property when compared to older properties.
Where to Find Comparable Properties
Look Up Advertisements Online
Locating rental advertisements in your area is straightforward thanks to websites like Trulia, Hotpads, Zillow, etc. Keep track of the apartment units that are immediately reserved, those that lower their prices, and those that have been available for sale for several weeks at a time.
Carry Out In-Person Market Research
To do this, you must compare your property, in person, to a number of others in the area. Ask the landlord to show you around the property and be honest about your research.
Hire A Property Management Company
A seasoned Metro Detroit property management company has the tools required to research the market, how your property fits into it and how to screen tenants.
Adjust the Price Based on Amenities
Every unit is different, even between two units in the same building. So, when you’re looking at similar properties in your area, be aware of their amenities. These can drastically change the individual price of the property.
- Measurement in square feet: For example, a one-bedroom apartment will be more desirable if it has more square footage.
- View: Apartment complexes facing road are not as attractive as those with a view of a garden.
- Layout: You might expect to pay less in rent since railroad-style apartments are less desired than other layouts.
- Floor Level: Units on upper floors are frequently preferred by tenants. The walk-up is the only exception. After the third floor, you will lower the rent because tenants are less likely climb up and down stairs.
- Upgrades: The newest appliances, marble or hardwood floors, and other luxuries increase the value of a unit and cause it to sell more quickly.
- Extras: An extra closet, balcony, or window makes a unit more desirable.
Ensure You Cover Your Costs
Everyone has unique expectations concerning owning property. Whatever your main goal, the appropriate rent must, at the very least, cover all of your operational expenses for the property. The payments should cover:
- Your PITI mortgage payment.
- Property upkeep and maintenance.
- Vacancy fees.
- Unexpected costs.
Furthermore, property owners may be able to pocket up to six percent of the monthly rent.
Keep in mind that many landlords, especially those with substantial mortgage obligations or construction debts, cannot achieve a profit until they sell their property or have held it for a considerable period.
Regardless, if you don't see a financial gain from the apartment each month, you either set the rent too high or, worse, overinvested in the building.
Bottom Line
If you choose to rent out your house, you cannot base the rent only on your loan payments. You might be able to calculate a profit while also easily finding renters by choosing a rent price based on the overall cost of turning your house into an investment.
Contact Nelson Property Management if you require assistance understanding the market or determining how to optimize your rate to attract the ideal tenants. We'd be delighted to assist you.
In the Metro Detroit area, we at Nelson Property Management work hard to provide the best property management services. Our property managers keep a close eye on the neighborhood market to spot trends that influence your bottom line. To position your rental property for success, we carefully consider the opinions of actual tenants.
Our property management solutions can help your investment properties in Metro Detroit succeed whether you're wanting to increase profitability, expand your portfolio, or simply say goodbye to the hassle of DIY management.
