Deciding on a fair monthly rent to charge for a home can be challenging for investors new to the rental property business. Low housing prices, including foreclosure deals, have enticed many first time property investors into becoming landlords. Keeping the home occupied with good tenants, at the right price, allows investors to make as much money as possible from their investments. How do you calculate fair market rent?
Look for comparable rental houses in your local newspapers to calculate fair market rent for your property. You should also check on Craigslist and on any housing websites that are specific to your town. Comparable properties should have the same number of bedrooms and similar amenities.
Go to a fair market rent database and compare the monthly rent amount for properties that have the same number of bedrooms with your county's average. The Resource Section of this article has links to some fair market rent databases.
Add or subtract amounts, starting in increments of $25 to $50, from the monthly rent of comparable properties to account for special attributes. Special attributes may include items or characteristics such as a swimming pool, hardwood floors, fireplaces, a finished basement, a garage, location, acreage, condition, or lawn care.
Go and look at rental properties that you think may be similar to verify your assessment of your property's relative condition and amenities.
Decide on a monthly rent for your property and advertise it. Lower the rent if you have to wait more than a few weeks to attract potential renters. Consider increasing your rent when the current lease expires if the house rents immediately.
Ask your Chamber of Commerce for a list of housing resources.
If you rent your property immediately, your rent may be too low causing you to lose money. If your rent is too high, your property may sit empty causing you to lose money.
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