We do the research, shop the available properties, and finally make a suitable purchase of rental property. With everything ready to go, it’s now time to locate a tenant. We’ll need to know the rent to be charged, so a grasp of the factors influencing rents is important.
Supply – What is the supply situation…how many comparable rental units are available in the immediate area? Pretend you’re a renter and look through the newspaper ads, drive around and look for signs, and don’t ignore the individual owner-landlord properties. They are all your competition.
Demand – What factors are out there that may influence demand for your rental(s)? Is the area growing, with new jobs and industry? Or, not so good, are people moving away? Do you know of new commercial ventures coming to the area, or community developments that will make the neighborhood more desirable soon? Demand is the other side of supply.
Competition and Features – Supply and demand are important, but property characteristics, features and benefits can have an impact as well. Recent surveys of renters indicate that a large percentage will decline to rent an otherwise suitable property if it lacks their most desired feature. What might that be?
· Washer and dryer
· Security features
· Modern or gourmet kitchen
· Large area for entertaining
· Close to work
· Close to green areas
With the price of vehicle fuel always climbing, location is more of a concern for many renters. Proximity to jobs, shopping and outdoor recreation can add value to your property, allowing you to ask more in rent than comparable properties farther away.
Have you done renovations that include the latest in kitchen or bath features found in single family homes? Whether it’s cable TV, high speed internet access, or some other hot new feature, if your unit(s) offer amenities that are in demand and not found in many of your competitor’s units, then you can charge more for rents.
Your Desires – It isn’t all about the market. What are your desires or abilities? If you hate interviewing and selecting tenants, you might want to reduce rents to entice them to stay for longer lease periods. Lower rents also increase the pool of tenant prospects, making interviewing and selection easier.
Weigh all of these factors and research the competition. Watch your market area, and make adjustments when conditions or your desires change.