Apartment and Rental Properties - How to determine how much to charge for rent?

Wondering what other landlords use to calculate monthly rent? Doing the comps? Charge per square foot? and how much per sq ft? A percentage of the market value? I am at a loss ....Please ,,,if anyone out there has some good advise and or information for me I would really appreciate it. Thanks !!:help::help:

IMO it would be best to compare with other rentals about the same size/type in the same area. You might also want to caculate your cost of ownership.

marksr is correct, in almost all cases, rental prices are market driven. As landlords, we can only hope the market is high enough to cover our costs. In my area, we have a lot of very old poorly maintained cheap rents, which makes it hard to build something new. Shore areas on the other hand can get thousands per week during the summer, they also remain empty for most of the winter. So check around, adjust up a bit if you feel you have something unique to offer. And check with your accountant, he/she is the one who will know what you are actually making.

GL
Bud

I think it's all about comparables. What I do is go on Craigslist almost every day whether I have a vacancy coming up or not and look at what is available and what the rents are. That gives me a rough idea of what the going rents are for comparable properties. If I see a property that seems high compared to others and has been listed for quite a while, I have an idea what rent is too high.

When I know I have a vacancy coming up, I will call the landlords with rentals to get specifics so that I can compare what I have. Many times I will also drive by the comparables. That helps me determine where to set the rent. IMHO, what your cash flow is has nothing to do with what the rent should be. If you price it to get a positive cash flow and that makes the rent too high, no one will rent it and your cash flow really goes in the toilet. As an example, let's say you list a property at $1,000 per month when the going rate is more like $900. If your property sits vacant for 1 month before you realize your rent is too high and have to lower the asking rent to $900, then you have lost $1,000 that year. It's never easy (at least not for me) determining where to set rent, even after being a landlord for my 2 properties for almost 15 years.

thank you all for your info on the rent ? question.....I am gonna have a hard time finding comparables for this property...Maybe Ill check with the bigger real estate companys that also have rental property...s

Is your property for rent, unlike any of the other rentals in your area? Even if there is no identical property for rent, you should be able to get an idea and adjust up or down depending on how it compares. Newspaper want ads usually have a good selection of properties for rent.

We kind of arbitrarily set ours for a while based on nothing more than our own thoughts. We had some vacancy problems several years ago and decided to lower the rent. The increase in cash flow even with the lower rent was incredible due to the nearly eliminated vacancies (less than 1% 2007 and 2008).

It's probably best to use both methods to determine the rent. Then, you can compare.

Use the Return on Investment calculations: Annual Expenses (Mortgage), Annual Operating Expenses (Maintenance, Insurance, etc.), Desired Rate of Return (10%). That should tell you what annual rent should be. Then, divide by 12 to determine monthly rent.

But, as indicated, this method may conflict with what the actual market will bear in your area. Thus you must do Market Analysis. You do a market survey of comparable rental properties in your area. Depending on where you are located, one block over can demand higher rents, but your block may not be as desirable. But, if you have parking, then you can charge more.

You don't indicate if the rental property is an apartment or a house. Houses can demand more rent than apartments. Both can demand more if located close to a hospital or university or in a desirable area, say, overlooking a park or near one with a jogging trail. Located close enough to wall to shopping. So, location makes a difference.

Rents in major metropolitan areas tend to be way over the top because of the demand. So, demand for rental properties in your neighborhood is also an important factor.

Size of rooms is important. Properties with larger rooms and more rooms can demand higher rent. More upscale properties with updated kitchens and bathrooms can demand high rent. Having a laundryroom with washer and dryer can bring more rent.

There are many things to consider before making the difficult decision as to what to charge for rent. Once you decide what you think is a fair rent for the property, you need to familiarize yourself with your state's landlord tenant laws. These are posted on the internet. You need a good rental contract that spells out everything clearly. You might want to work with an attorney on this. There are sample contracts online that can be modified to meet your needs and your state laws.

My previous landlord demanded first and last month's rent + damage deposit, hoping to discourage bad renters. He still got bad renters, some of whom never paid their rent, and he had to go through the required legal process of eviction in court. Where I live now, there is no damage deposit. The owner decided, due to lack of demand, to drop the deposit and allow pets with an extra fee. There are more units rented now than when I moved in.

The 2-bedroom unit next door costs $50/mo. less than my 3-bedroom unit. There is no washer and dryer hook up, but there is a laundryroom on the property. Cost/load is considerably less than the local laundrymat down the street. Kitchens and bathrooms are dated. There is a parking space in front of my door. The property is attractive and just down the street from beautiful, turn-of-the century homes. Rent is $550/mo. with water included.

We kind of arbitrarily set ours for a while based on nothing more than our own thoughts. We had some vacancy problems several years ago and decided to lower the rent. The increase in cash flow even with the lower rent was incredible due to the nearly eliminated vacancies (less than 1% 2007 and 2008).

EXACTLY what I figured out the first few years I had rentals. Despite what some of the books say, it doesn't always pay to try to get every last dollar of rent you can. And it isn't just lost rent that costs you, it's all those little things in getting a place ready to advertise and rent to a new tenant. If I have a good tenant, I will bend over backwards for them to get them to stay.

Is a house. 3 bedrooms, 2 1/2 baths, living room, dining area, family room, kitchen,laundry area. Washer & dryer included, furnished kitchin : dishwasher,smooth stove top, wall oven, refridge(all 2 yrs old),garbage disposal. Eat at bar between the fam and kit. Stone fireplace,garage with auto door, 24X32 ft deck with privacy rail,1/2 acre lot, carpet. Close to interstate access, pharm,stores,good schools,university close, med school close,on bus route. Oh and bedrooms are 15X12....No comparables in my area...Have any ideas???? thanks for all your info.......s