As a landlord, knowing how to set an accurate, competitive price for your rental is imperative for your property’s success.
Whether you’re filling a vacancy or bringing your property to the market for the first time, it’s important to have an idea of the going rates for a home like yours in your neighborhood.
While there are several factors involved in deciding the rent of your Kansas City home, it’s possible to figure out an appropriate amount through some research and planning.
Compare Yourself to the Competition
To create a rental price, you must first compare yourself to the local market. This is where you want to think like a tenant and ask yourself: What are some of the things I have that others don’t? And vice-versa?
While you carry out your research, keep in mind the factors discussed below when trying to determine how much rent should be charged for each individual unit. Remember that there is no one-size-fits-all approach, though. Every property is unique and should be priced accordingly.
Factors to Consider When Determining the Rental Rate
The Neighborhood
You should not only look into the average rental price in Kansas City, but also in the exact neighborhood your property is located. The price can differ greatly from one part of the city to another and price is the top factor that tenants consider when making a decision.
Is it a quiet neighborhood with great neighbors? Are there nearby parks, schools, and businesses? These are some questions to consider.
The Number of Bedrooms and Bathrooms
Look for homes with your exact number of bedrooms and bathrooms. It’s no use comparing, for example, a 1 bedroom 1 bath apartment with a 5 bedroom 3 bath home.
Single Family vs. Multi-Family
Single-family homes tend to be more spacious and offer more privacy than multi-family homes. Consequently, you will generally want to set a higher price for a single-family unit.
The Building’s Construction Updates
Typically, renters will pay more for newer buildings, as they offer modern amenities that a home built over a decade ago usually doesn’t offer.
Assess Amenities
When you are pricing your units, make sure the price is appropriate for the demand. If not, you may be underselling your rental property and ultimately losing money.
If you find the value of your amenities is too low, you may want to consider sprucing up the place or adding extra amenities if you know that’s what people want.
Here are a few amenities you should assess when determining your pricing strategy:
Views
Tenants prefer a property with lots of natural light and scenery. Does your property face a beautiful city skyline or park? Or, is it a basement suite facing the parking area?
Updates
Granite countertops, stainless steel appliances, sturdy shower heads, and newly painted walls go a long way when tenants make their decision.
Square Footage and Layout
It’s safe to say that most potential tenants are looking for a space that accommodates their belongings, as well as provides an overall feeling of spaciousness.
Floor Level
The higher a floor, the more it costs to rent. Walk-up apartments are an exception because tenants living on those floors must climb stairs every time they enter or exit their homes.
Parking Space
This amenity is both in demand and can be a competitive edge when renting out your property.
Bonus Amenities
Another factor that affects the price of a rental unit is how much storage space it has, whether it includes a patio or garden, and what kind of landscaping those areas include.
Perform a Comparative Pricing Study
So where can you find all of the information you need for a pricing comparison study? Here we’ve listed the best sources for you to check out the competition:
In-Person Visit
If you have the time, schedule an in-person property visit with your most closely-related competitor. Asking questions is a good way to see whether there’s significant interest in the space while gathering information about the price and amenities offered.
Online Ads
To help you determine what you can charge for your home, there are several online tools available to assess the value of a property. The most popular are Zillow and Trulia, but Apartment List and Rent Jungle are also valuable resources. Each site has its own strengths and weaknesses. Take advantage of all four to get the most accurate picture possible.
Realtor’s Opinion
You may want to talk with several realtors and get their opinions on what rental price the property will fetch. Real estate agents, as well as property management companies, are heavily involved in renting out properties in a neighborhood. They should have a good idea about which properties are renting quickly in your area and how yours compares.
Avoid Renting Too Low or Too High
When pricing your Kansas City home to rent, it is important that you avoid renting too low or too high. It is also important to make sure that you have a fair understanding of the market’s conditions based on the economy.
If the local economy is good, it would be wise to set a higher rent on your property as this will result in higher returns. If the local economy is struggling, it might be better for your bottom line if you lowered the rent rather than turning away tenants who are unable or unwilling to pay full market value for their accommodation.
Set an Appropriate Rent for Profitability
The rent you set should be high enough to cover expenses, but not so high that it is unattractive to tenants. Renting your property should also allow you to recover costs associated with maintenance, management and advertising, taxes, expected vacancy periods, and unexpected factors like major renovations.
Conclusion
We hope that you have a better understanding of how to make the most of your rental property and what your rent should look like. As we mentioned earlier, it’s important to remember that there is no one-size-fits-all approach.
If you’re looking for professional property management, contact the experts at Young Management. They can help you set fair rents and will manage your property efficiently!