If you own rental property, your goal is to keep it occupied as much as possible. That way, you have plenty of cash coming in that you can use to cover your expenses. At the same time, how do you know that you are charging enough for rent? There are several factors to consider, and you may want to reach out to an expert who can help you.
The Quick 2 Percent Rule
If you are looking for a quick way to estimate the rent you should charge, you may want to use the 2 percent rule. This dictates that the monthly rent you should charge should be between 1 and 2 percent of the property’s value. You might be able to use this as a starting point, but you need to dig deeper into the numbers to figure out exactly how much you should charge.
Consider Your Overhead Expenses
As you figure out how much rent you should charge, do not forget to consider your own overhead expenses. PITI is a great place to start, which stands for principal, interest, taxes, and insurance. At the bare minimum, you must charge enough rent to cover your monthly mortgage payment, assuming you have one. Then, do not forget that you will need to have money set aside to cover potential repair and maintenance expenses on the property.
Compare Your Property To Similar Rentals
To truly figure out how much money you should charge, you need to compare your rent to the rent for similar properties in the local area. Is there another condo that looks like yours that you can use to figure out how much rent you should charge? Is there a similar house in the neighborhood up for rent that you can use as a baseline? Your rent should be similar to the rent charged for similar properties in the local area.
Think Carefully About Your Rent
If you consider all of these factors above, you can figure out how much you should charge for rent. Do not hesitate to reach out to an expert who can help you.
