Determining the right amount to charge for your rental property can be difficult. If you charge too much, you may have trouble finding tenants, which, in turn, reduces the amount of rent you collect. However, if you charge too little, you may lose out on potential income. When it comes to determining the fair market value, you must take several factors into consideration. Far West Realty wants to educate renters on determining the value of your Prescott rental property.
Market Rent
Market rent refers to the amount people are willing to pay in a given market. This applies to apartments, homes, and anything else you may rent out. For example, one town may be able to charge $1,500 for a 3 bedroom/2 bath home, while another area can charge a rate of $2,500 for the same thing. Rates can vary from town to town or neighborhood to neighborhood. There is not a “one size fits all” way to determine what your market can handle, so it is essential that you do research for your specific area.
Research
There are many factors that affect the fair market value. We suggest research to determine what is being charged for similar properties in your area. Be sure you are comparing apples to apples. A 2 bedroom/2 bath furnished home with a garage and a yard is not the same as a 2 bedroom/2 bath unfurnished with street parking and no yard.
Supply and Demand
Another factor to take into consideration is the vacancy rate in your area. Vacancy rates will give you an idea of the demand for rental units. Higher demand will allow you to charge a higher rent, whereas a low demand may force you to lower your rates. Environmental factors such as your city’s projected growth or the national economic climate may also play a part in setting your rental rate.
Setting your rental rate is one of the most important steps in renting. Do not rush through the process when doing your research. If you are uncertain about the fair market value of your income property, contact us. The professionals at Far West Realty know the Prescott rental market, and we can help you get the most out of your rental property. For all your property management needs, call Far West Realty today at 928-772-9400.