Setting the appropriate rent is important in renting your property. In setting rent, many landlords will look at their mortgage, taxes, and expenses and set the rent based on those factors in order to cover monthly costs. While those are important to consider in evaluating rental potential in the purchase of a property, they are not typically important factors in setting rent. Rent should be determined from what the rental market is doing at that point in time.
Example:
You have set rent at your property at $1,200/month. Comparable properties in the area are for rent at $1,100/month. Due to the higher than market rent, your property goes unrented for 2 months longer than the available similar unit which is appropriately priced.
At $1,200, your pricing, for the 12 month period starting with when you first tried to rent your property (having lost 2 months), you received $1,200 X 10 months = $12,000.
Had you set the rent appropriately at $1,100 you would have received $1,100 X 12 months = $13,200.
In addition to the market rate rent providing a $1,200 profit compared to the higher rent, the landlord also likely spent significant effort and cost in advertising and repeatedly showing the unit; and also had two months without rent where the property’s costs had to be covered. The market rate is the way to go!
How to set your rent:
When deciding how much to charge for your rental, evaluating similar rentals is a key component. In evaluating rentals the following are important factors:
Neighborhood
Compare properties in the same neighbourhood. The Halifax area is highly variable – a property in South End Halifax will be priced differently than one in Armdale or in Lower Sackville.
Size & Amenities
Square footage, total living area, number of bed and bath rooms, size of the yard, furnished or unfurnished, utilities, parking, access to transit, the view:tThese are some of the seemingly limitless list of amenities you want to consider in the pricing of your unit.
New vs. Old, Single Family vs Multi Family
The appeal of a new or recently renovated home typically results in much higher rents than homes that are older. Older homes that are well cared for, cleaned, and tastefully decorated can still demand reasonably high rents. Rentals in single family homes will typically command higher prices than those in multifamily homes.
If you'd like a free rental analysis, contact Anchor Property Management.