There are many factors to consider when setting an asking rent for your property, and the following is a quick rundown of what a landlord should take into account. The market will dictate some prices, while other factors will fluctuate depending on customer’s preferences and will help you with a rent estimate.
The location: With the real estate boom in recent years, rents have risen in many neighborhoods that were once notoriously affordable like Vancouver or Toronto. When it comes to setting an asking rent, it's important to consider the region as well as how popular that area is among renters. For example, renters in Vancouver are willing to pay higher rents because they're often upgrading from poorly maintained rental units with few amenities. On the other hand, renters in Guelph are more likely to rent by owner because units in newer neighborhoods like East End offer all the amenities at a lower price.
Building age: The age of the building will also have an impact on what you can charge. Older buildings are less desirable, and so it makes sense to charge lower rent prices to attract a tenant. There's no need for you to completely gut these old buildings because they're not selling anyway! On the other hand, newer buildings will be more appealing to the demographic looking for new apartments or condos and as such, they should ask for higher rents.
Lease term: The lease term is another important factor to consider. While it's possible tenants will take the offer, it's unrealistic to assume your tenant will accept rent for the long term. If you need a long-term tenant, consider offering a longer lease period instead of offering higher rent prices and while giving a rent estimate.
Market analysis: Taking into account the demographics of your potential tenants will help determine what they're willing to pay for your property. For example, older people should be willing to pay more money than someone that's moving out on their own and young teachers looking for housing in Toronto or Vancouver should be willing to pay less than someone that's been living there for several years.
Property condition: When doing a market analysis, you should consider the condition of the property. If it's in major disrepair, you may want to charge more rent in order to receive a better tenant. If you're offering a long-term lease, you should take this into consideration as well. Otherwise, it could be a possibility to use that too with your tenant and reduce your asking rent prices accordingly.
Sum up all the factors: Adding up all these factors will help you come up with an asking rent that's fair for both yourself and your tenant. Of course, the more popular an area is among renters, the more likely it is to attract a higher class of tenants.
Diminishing returns: The longer you wait to set your rental price, the more chances you're going to lose out on potential customers. If you don't take into account all these factors when setting an asking rent, you may end up losing some money at the end of lease terms.
Send out a list of rental prices: Sending out a list of rental prices that are fair for your neighborhood will help attract prospective tenants faster! When it comes to asking rents, this is especially true for newer properties and those in high-demand areas.
Hire a real estate solicitor and a surveyor: The job of the person in charge of setting renting prices should be to stay within legal boundaries. A real estate solicitor and a surveyor can help you assess what you're allowed to charge and what you're not allowed to charge.
Make a list of potential tenants: Making a list of potential tenants that are interested in renting your property is an important step as well! Finding out who's looking for apartments or condos and what they're willing to pay will help determine your asking rent.
Negotiating with potential tenants: Asking the average asking rents for your property will let you determine what you're willing to pay. If you're going over that amount, it will be more suitable to negotiate for a lower price.
A rental marketing plan: Knowing how much money your tenant can make will help you determine what rent prices should be offered in order to fill up your unit. It's a good idea to include the value of add-ons such as laundry equipment or dishwashers and the total expenses for running an apartment building. You should also consider whether or not to charge service fees if people are making major repairs.
Set an asking rent: By considering all of these tips, you should be able to come up with an asking rent that's fair for your market and your property. It's also a good idea to periodically compare your rental prices with the average rental price on the market. This will ensure you're not charging more than what the renters are willing to pay!
These are the factors that will determine the rent estimate.
Now, let us have a look at how to calculate a market rent estimate in 5 easy steps-
Know the average asking rent for your neighborhood and the value of add-ons such as laundry equipment or dishwashers.
Research your property's value and potential repairs as well as maintenance costs.
For new rental units in high-demand areas, you should be willing to pay more than the average asking rent. On the other hand, older buildings in less popular areas should ask for lower rent prices.
Determine your property's potential earning potential by adding up all income generated by renting out your unit and subtracting all expenses to get a rough rent estimate of what you can earn if no demand is placed upon it.
Set your asking rent depending on the factors described above and you should be good to go!
For more information, you can visit Real Estate Calculators.
