Many people think that the way to make the most money on their rental property is by charging a higher amount of rent. While this idea seems like common sense, charging a higher monthly rent may not always make you the most money for your rental property.
Homeowners want to receive the highest rental rate possible, however it is important to remember that you could end up paying more out of pocket for a higher rent rate. If you determine a monthly rental payment that is on the higher end, your rental property may take longer to be rented. Everyday that your property is sits vacant, is income you are losing. If it takes a month to find a tenant who is willing to pay a higher rent price, you may make more money by reducing the monthly rent.
As an example, your home is in rent ready condition, has a lot of upgrades, and is one of the larger floor plans in your neighborhood. The going rental rate in your area is $1,500, but you want to rent your home for $1,600. You do rent your home for $1,600, but it takes an extra month to rent. Instead, lets look at what would happen if you rented your property for the going rate of $1,500 a month. You rent your property immediately. In this situation you will realize $1,200 less in rent over the course of a year. However, when compared to renting your property for more and having it sit on the market for a month, you would realize a larger loss of $1,600 over the course of a year. Renting your home for a higher monthly rate actually cost you more for a year lease.
On Q Property Management recommends that you consider all of these factors when setting the monthly rental rate for your property. Decide if you are more concerned with the monthly rent payment you will receive, how fast your property will rent, the type of tenants that will be in your property, or receiving enough income to cover all the expenses for the property. Consult with someone who is familiar with the going rental rates for the area where your rental property is located. There are many factors that can help you to set a competitive rent price and receive the most rental income for your property.