A crucial component of being a profitable Columbia property owner means setting good rental rates. The right rate attracts high-quality, would-be renters to your space. Pricing yourself too low or too high leads to the wrong outcome as a Columbia-area investor, often costing you time and denting your profit margins.
If you value positive renter relationships and want your residents to keep paying rent, you’ll need to fully understand how to set the best rate for your investment property. It’s not exactly easy to determine the best rate: it requires time spent researching similar rental homes in the Columbia area. However, relying on a partner who provides a full range of property management services would help you!
A Columbia property management expert like Renters Warehouse finds your 'bullseye' rental price using market analysis. Here are some of the crucial components property management companies investigate when conducting an analysis for your Columbia rental property!
Rental Homes on the Market
Knowing where you stand with prospective tenants relative to the competition is essential. A part of that is knowing how many rental homes exist in your market. This number includes both those that are vacant and those that are rented. You’ll need this estimate to gain insight into what your would-be renters will experience if they are looking for a property in the Columbia area. If there are fewer homes available, that may increase your rental margins if people are looking to live in our part of Maryland!
Types of Property
Next, consider the types of rental property available in your part of Columbia. This includes single-family homes as well as multi-family properties. Single-family homes tend to generate slightly higher rent rates, especially in the wake of COVID-19—but they also have a larger footprint and cost more to purchase and maintain.
It’s important to know which options exist as the dominant force in the Columbia rental market, as well as how many. The condition does matter, as well as the number of rooms and any additional amenities (such as parking) which are available.
Vacant vs. Occupied Properties
It is hard to price your rental home higher in a community with numerous available properties at a lower price. If you see a lot of other vacant properties listed in your neighborhood, that could be a signal that the area is less desirable to renters or may not have as much demand for different reasons. On the other hand, if an area has few vacant properties, that could mean there is demand here, driving up your rental price.
As a Columbia property management expert, we also recommend you look at occupied properties ('off' the market) for an idea of how to price your property. They give you an idea of what 'sells' in your neighborhood. Vacant properties indicate a good (in this case, housing) that isn't 'flying off the shelves.'
Average Rent per Square Foot
The next factor to keep in mind is the average rent per square foot in your market. You’ll need to determine how much your property is worth based on its square footage. This is the best way to compare properties of different sizes. You can get a very basic picture from Zillow. However, you’ll want to use rental property owner tools and resources to make final decisions.
Average Application or Leasing Fees
Most of the time, you’ll want to charge an application fee. This helps to weed out renters who are not serious about moving into the area or looking for a property, and it saves you time. However, if your application fee is too high, it can limit the number of people who apply.
You can use listings in your area to better understand what kind of leasing fees are common within your community. Be sure to zero in on your local area as much as possible. While your tenant screening process will help you reach weed out some of the risks for your Columbia property, the right application fee does some of this for you as well.
Average Number of Days on the Market
Another important factor is how long it takes to find high-quality renters for a property. Consider this: If you know it takes, on average, 35 days to find a renter for vacant properties in your area, and your property is rented within just a week, does that mean you mispriced your property too low and could have gotten more for it? However, if it is still sitting there after 45 days, that may mean your rates are too high.
There Is More to It: Rent Estate™ Advisors Can Help!
There are many other factors that play a role in determining your 'bullseye' price. For example:
- You may have some of the most desirable upgrades to offer your soon-to-be-renters, which can boost the value
- You may be doing more to maintain the property than the competition, which can help your appeal
- Perhaps your rental property has ramps and bars to aid people with disabilities
- Even details like how close you are to schools and playgrounds matter!
There is a great deal of work and research that goes into pricing your property. It can get overwhelming, but it is important to get this pricing just right.
With the help of a Columbia property management company like Renters Warehouse BW Metro, you can land the best property rate! However, after you've correctly priced your property, your work is hardly over.
To get a head start on the next phase of your property listing process, download your free copy of our Perfect Property Listing Checklist!