So you’re not working with a management company, but you’ve decided to rent out your home and you need to know how much rent you can get for it? Be sure to price it competitively, or you’ll have a few unintended consequences. A quick resource for the Do It Yourself Landlord:
Base the Rent on Market Value
Basing the rent on market value is important and it allows you to rent your home expediently. If you price the rent too high, it will sit vacant for too long thereby reducing your overall cash flow and leaving many people wondering what could be wrong with the property. If you arbitrarily price the rent higher than the monthly mortgage that you pay on the property and higher than what the market will support, then you are most definitely not in the right situation to become a Landlord and you should not be trying to rent out your home!
Search for Comparable Properties in the Same Neighborhood
Scan newspapers, rental magazines, online ads, rental sites and drive around in your neighborhood to evaluate an average going rate for home rentals based on square footage, number of bedrooms, number of bathrooms, garage space, proximity to amenities, included features, home condition, upgrades, finishes and so on. Take notes, be honest, be emotionally detached and don’t automatically assume your property is more valuable without the proof to back it up. There are several rental advertising websites that include local listings to begin your comparable research and listed below is just a sampling:
Check Real Estate Data Websites
The ever-popular Zillow and Trulia provide all sorts of data on single family homes: Zillow has Rent Zestimates to compare and help evaluate a rental price. However, because those two sites receive syndicated data from other real estate websites and multiple listing services, this information is not always timely, up to date or completely accurate.
Compare to Online Rent Calculator
One website that offers a tool for computing or at least evaluating a rental price, is listed below. While this can be helpful as a starting point, basic guideline or simple comparison, Landlord beware that no tool is perfect. The further the homes get away from major metropolitan areas, the less data each site has for comparisons, and the less accurate the tool will be. Again, just use it as a starting point and then compare it to your research of comparables in your neighborhood:
The art of pricing is also a science. When in doubt, consult with a professional. Good property management companies that are experienced and knowledgeable, not only have their own history of data, but are also adept at pricing rentals for executing leases quickly.