Once your rental property is ready for quality Tenants, the next step is finding them! In order to attract qualified Applicants, Landlords need to do two equally important things: pricing and marketing your rental unit.
In this month’s learning series, we’ll provide step-by-step guidance for pricing and marketing to ensure that you’re able to attract qualified Applicants in a timely manner.
How to Price Your Rental Unit
Pricing is one of the most important – and challenging – things that Landlords do. It’s tricky because you have to make sure that you don’t price too high or too low – if it’s too high, you’ll have trouble attracting Applicants and see increased vacancy costs, but if it’s too low, you’ll have lower returns and won’t be maximizing your rental income. Getting it “just right” can be hard, but the right pricing system will help you consistently hit that sweet spot.
1. Know Your Baseline Rent
The first step for pricing is knowing what your baseline rent needs to be. While you can’t set rent based on what you “want” to get, it’s still important to know what your monthly expenses are and what your baseline rent needs to be to cover them.
Add up your monthly payments for insurance, taxes, mortgage, and any other monthly fees you pay. On top of that, add an amount in for repairs and maintenance. A good rule of thumb is to calculate annual maintenance fees of 1-2% of the value of your property. You can then divide that by 12 and add it to your monthly costs.
Once you’ve added up all monthly expenses, you have your baseline rent. To have any monthly cash flow, your rent needs to exceed this number.
2. Research Comparable Rental Prices
Next, find out what the rental price is for comparable rental properties in your area. The easiest way to do this is by searching online listings. When looking for comparable prices, it’s important to find properties as similar to your property as possible – especially focusing on properties in the same neighborhood, that are a similar size, and have the same number of bedrooms and bathrooms as your property.
Finding comparable prices will give an average rent price in your area and a good range of rental prices for comparable properties.
3. Adjust Your Rent Up or Down as Needed
Next, you can zero in on the right price for your property by focusing on the unique features of your property. For example, factors like outdoor space, parking and garage spaces, and kitchen and bathroom updates can mean that your rent should be adjusted slightly up or down from the average rent of comparable properties.
This isn’t an exact science, but it’s helpful to make some adjustments to the comparable rent price to account for the unique features – or challenges – of your property.
4. Check Your Work
Once you’ve gone through these three steps, you should have a well researched rental price. Even so, it never hurts to check your work before listing. Take advantage of online rental estimate tools like Rentometer, Zillow, and Redfin to see what they suggest your property should rent for.
Hopefully, their estimated rent price and your proposed rental price are close. If they’re not, it’s worth rechecking the comps in your area to make sure you haven’t missed anything important.
5. Stay Current
When pricing your rental, it’s important to keep in mind that rental prices can change, especially in volatile markets. This means that even if you came up with a rental price a few months ago when considering purchasing a property, it’s important to go through the pricing process again when you’re ready to list to make sure you’re keeping up with changes in demand in your area.
View this post on Instagram
How to Market Your Rental Unit
Once you’ve set your rent price, you’re ready to list and market your property. Here are some tips to help your listing stand out and to ensure you attract qualified Applicants.
1. Take High Quality Photos
More and more people use online listings to find and select rental properties. With that in mind, it’s important to have quality photos for your rental listings.
Before taking photos, make sure that your rental is clean and looks its best. It can be worth it to hire a professional to take high-quality photographs of your property. If you opt to take the photos yourself, make sure that you use a quality camera, have good lighting, and capture the best features of your rental unit.
Listing videos are also becoming increasingly popular, so it’s worth creating a high-quality video tour to include with your online listing.
2. Write a Great Rental Listing
The next step is drafting your listing. This is something that Landlords often don’t think too much about, but the listing is worth doing well because it can help your listing stand out and attract more attention.
There are two things Landlords should keep in mind when drafting their listing:
- The target audience. Who is most likely to be interested in your listing – young professionals, families, retirees? Consider your target audience and write your listing with them in mind. This means focusing on the features of your property that would be most appealing to your target audience – for example, great schools if you’re targeting families.
- The best features of the property. Is your rental in a great location and close to popular amenities, great schools or public transportation? Does it have great outdoor spaces, a beautiful kitchen, or lots of storage? Think through the best features of your rental and include those in your listing description. 3. Post Your Listing Online
Once your listing is ready, you want to publish it on online sites. This is one of the best ways to market your property and reach as many potential Tenants as possible. When doing this, it’s important to do some research about popular rental listing sites for your area, as some cities and regions have their own sites.
That said, sites like Zillow, Realtor.com, Trulia, Apartments.com and Facebook marketplace are good options in most markets.
3. Take Advantage of Low-Tech Marketing
While promoting your listing online is important, don’t overlook the value of low-tech marketing. Two tried-and-true methods for finding Tenants are:
- Posting a “For Rent” sign on your property with a contact number; and
- Taking advantage of word-of-mouth marketing. This means letting other Tenants, neighbors, friends, co-workers, and family members know about your listing. You can even offer a finders fee to Tenants or neighbors that refer a Tenant to you. Word-of-mouth can be one of the most effective ways to connect with your target audience and to connect with qualified Applicants.
Finding Quality Tenants
Once your rental is priced correctly and you’ve implemented a marketing strategy, you should be well positioned to find, screen and select a qualified Tenant. In Part 4, we’ll talk in-depth about screening Applicants and selecting a qualified Tenant.
Kevin is passionate about helping others to become a better Landlord by providing tools and education to help them thrive.