Property Management Blog

How to Get the Most Rental Income for Your Rental Property

Property Management Blog

How do property managers determine what to list your property for rent? Many homeowners think that property managers and landlords pick the price, when really, it’s the market. There is usually a range with a high end that you hope to get and a low end that you don’t want to go below. There are some things that you can do to help your property rent on the higher end of the range.

Comparable rentals

Property managers review the market conditions and what similar rentals have rented for and adjust depending on if those homes have things that are superior or inferior to yours. Are properties taking longer to rent or are landlords getting multiple applications within days of listing their property? The former is an indication of a slowing or “tenants’ market” and the other “landlords’ market.” Markets change constantly so what your neighbor rented her house for six months ago may be different from what your home, which might be very similar to your neighbors, will rent for today.

Are you providing appliances if other rentals are? Are you in a community with amenities that people might consider desirable like a pool and walking paths? If so, you might be able to get more for your home than others if the other rentals don’t have those amenities. However, if they do then you cannot adjust your rent up since what they got for rent is an indication of what the market will pay for a property with those amenities already taken into consideration.

How flexible are you on terms?

For example, are you flexible on the length of the lease? If there are tenants who want to apply but are looking for a lease term that’s a few months longer or shorter, are you willing to accept them or keep waiting for someone else who will accept the lease terms you’re offering? 

Are you allowing pets? Many tenants have pets so not allowing pets can drastically reduce the pool of tenants who are looking at your property. If you decide not to allow pets, you may still end up with a tenant that has a service animal since they are not considered pets and you are required by law to allow them. 

Are you flexible on the move in date? In some cases, you may not have an option. For example, if you have current tenants moving out but if you’re the one occupying the property and tenants want to apply but move in a few days earlier, are you willing to move out early so they can move in? If not, then you may lose those prospects and the next people who apply may not want to move in until two weeks after you move out which means the property will have a two-week vacancy period and you’ll lose two weeks of rental income.

Your tenant screening requirements 

If you’re strict on your tenant approval criteria, then it may make it more difficult to rent and you may have to reduce the price to attract more interest and applicants. 

It’s the reverse or what many owners think is the case since owners think that qualified tenants can afford to spend more. That may be true but qualified tenants have budgets and like to save some of their income and have all the homes on the market to choose from since most landlords are happy to rent to them. 

On the other hand, people who are not good at managing their expenses sometimes will pay more because they don’t have a budget, don’t save, and have less options since they will not be approved to rent every property available.

You don’t have to swing too far in the other direction and have very low requirements either since you obviously want to have qualified tenants, but some owners go overboard and expect all tenants who live at their property to have 800+ credit scores and make six figures and there are many people who do not fit this criteria who make perfectly fine tenants.

What has nothing to do with what your home will rent for

What you paid for it and what your expenses are monthly. When you purchased the home, did you know or care what the owners paid for it? Or know what their mortgage was? Probably not. You just looked at other homes and weighed the pros and cons against the price each home was listed at and prioritized them. You may have had a first choice but also a second or even third choice if you didn’t get your first choice. 

How tenants determine what home they want to rent is very similar. They look at the homes that are available in their price range in the area they’re interested in and sort them according to what they like and don’t like about each home. You can get on the higher end of the rent range if you’re flexible on allowing pets, lease terms, and move dates and not be too strict when screening tenants.

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