How will you calculate the rent for your Killeen rental property?
Establishing an accurate rental value requires good data and experience in the local rental market.
You don’t want to underprice your home, because that will mean less monthly rental income for you. When you start with a price that’s below market, it will attract tenants quickly, but it will also be more difficult to increase rent in the future.
You don’t want to charge too much, either. If you do, you’ll have a hard time renting your property quickly to good tenants. A longer vacancy period is a lot more expensive than a lower rental price.
Here are a few things you can do to ensure you’re calculating the price of your rental home correctly.
Killeen’s Rental Market Impacts Price
Pricing your home correctly requires you to study the Killeen market and to know what kind of prices it will tolerate. Perhaps you want to earn $2,000 a month in rent because that amount will cover your mortgage and your taxes and insurance, while still providing some monthly income. But, if homes similar to yours are renting for $1,600 per month, your higher price will only leave you with an expensive vacancy or an undesirable tenant.
It’s vital to understand what’s happening in Killeen. Pay attention to market conditions and the rental landscape. When rental property inventory is low and demand for them is high like the market is now, you have a little flexibility with your pricing, because tenants will be competing for the best homes. But, when there is a lot of competition on the market, and plenty of homes for tenants to choose from, you’re going to need a reasonable price to attract good tenants.
Learn about the market and stay on top of its changes. If you work with a Killeen property manager, you’ll have someone watching the trends in the rental market for you. That will be a significant help when it comes to pricing your rental home.
How Location, Size, and Condition Impact Price
The performance of the current rental market is beyond your control. But, you can control how your property looks. These are the things that matter most:
- Location is crucial with rental real estate. A Killeen property in a good school district will easily attract higher rents and demand. If your home is close to public transportation or popular commuter routes, you can charge more than a similar home in a remote area. Spotlight your location in your marketing and advertising, especially if your price is a little higher than similar properties in less appealing neighborhoods.
- Property size also matters. In Killeen’s suburban communities, renters will be looking for single family homes with at least three bedrooms and two bathrooms. Those are the homes that can be priced well.
- Pay attention to property condition when establishing a rental value. If you want to attract the highest rents, make some improvements and updates. You don’t have to do a complete renovation or sink thousands of dollars into your property. Simple updates will work. You can change out the hardware on drawers and cupboards. Improving the lighting or the landscaping can also provide major returns for minor costs. To charge the most rent, your property must be clean, functional, and attractive.
Assess the Competition with a Comparative Market Analysis
Once you know what your property is worth, get to know the competition. Before you can price your property, you need to know how it stands compared to other properties.
This is where a professional Killeen property management company can really help. You can usually ask for a free comparable market analysis, which will track what similar homes are renting for in your area. This is extremely beneficial, because it will give you a range that’s acceptable for your property.
You can do your own analysis, but remember that your data will not be as reliable as a property manager’s. Several online rental sites like Zillow, Trulia, and Rentals.com will tell you what properties like yours are listed for. However, you won’t have access to what tenants are actually paying for those homes. Just because a home is listed at $1,900 per month doesn’t mean it actually rented for that much.
Compare other properties to your own. Perhaps you have more square feet and a better location. Those things will allow you to charge a little more. But, if the other properties have stainless steel appliances and two-car garages but you don’t, you’ll have to price your home a little lower.
Think seasonally as well. Most tenants are more likely to move in the spring and summer. So, you can price your home a bit higher then. If your rental property happens to be vacant in the middle of the winter or around the holidays, you’ll need to be more competitive with your price because not as many people are looking for homes.
Remain Flexible with Your Price
If you pay attention to how your listing is performing, you will quickly know if your price is too high.
You should be getting a lot of attention for your property once you begin your marketing. When your home is on the market and you’re getting regular phone calls and inquiries, and prospective tenants are asking to see the property, you’re probably in a comfortable rental range. But, if no one is calling and no one is applying after seeing the home, you might be pricing it too high.
Find a way to track your results. Property managers have software that does this for you. If you’re doing it alone, gather information on the number of people who are contacting you, how many of those prospects are seeing the home, and whether they’re filling out an application after the showing. This will tell you whether you’re in the right range.
If no one is applying for your home, the price may be the problem. Consider lowering it. It’s essential that you remain flexible. You don’t want to get too emotionally attached to the amount that you charge. Losing an entire month or two of rent is more expensive to you than lowering your price by $50 per month.
Property Management Killeen: Rental Price and Tenant Quality
Rental price often has a direct impact on the type of tenants you’ll place. If you want to attract the best tenants, you want to set your price competitively. They have options.
Well-qualified tenants know they will be accepted at any available rental property. Landlords love renting to tenants with good credit, documented income, and positive rental histories. So, desirable tenants aren’t going to waste their time with overpriced properties. The tenants who are willing to pay more are those who have been denied by other landlords. They probably have negative credit, low income levels, or damaging landlord references. Accepting a tenant like that is a big risk, even if they are willing to pay a monthly rent that’s higher than the market will support.
When you’re pricing your rental property, think about renting it out quickly to a good tenant. That’s the best way to protect your property and your ROI. The long term effects of your price are more important than your immediate monthly income. You won’t earn any income at all if you have to evict a tenant or wait for someone who is willing to pay your price.
Increasing Rent in Killeen during Lease Renewals
Most tenants know that their rent will increase at the point that their lease renews. Before you raise the rent, make sure you’ve confirmed that:
- The lease is renewing;
- The market supports higher rent for properties like yours;
- Your property-related expenses have gone up; or,
- You’re offering additional services, such as landscaping or internet.
Tenant retention is an important part of your investment strategy, and you don’t want to chase away good tenants with extreme price increases. When you want to increase the rent, make sure you can demonstrate to the tenant why it’s appropriate, and make sure it’s not an outrageous increase.
Good tenants who enjoy living in your property and appreciate the rental experience you’re providing will not want to move. But, they will look around and see what other properties are renting for before they sign a renewal. Keep your rental increase reasonable, and let the tenants know that the additional rent is consistent with the market.
Consider adding value when you implement an increase. Perhaps a free carpet cleaning will make your tenants happy, or you could offer to replace an aging appliance. Always give your tenants plenty of notice before you raise the rent, and keep the lines of communication open.
Pricing your Killeen rental property is an important part of your success as a landlord or investor. If you need help understanding the market or how to use your price to attract the best tenants, contact us at Shine Residential Management.
A property management company based in Harker Heights, Shine Residential Management cares for exceptional single-family homes throughout Central Texas, including in Killeen, Temple, Belton, Copperas Cove, Salado, and Georgetown.