You have to make a lot of decisions as a Salt Lake City property owner ('How do I correctly screen people with disabilities? Do I need to update how I handle rent collection?'), but few affect your business more directly than deciding how much to charge for rent.
This can also be one of the most difficult decisions to make for your rental real estate—which is why so many property owners choose to work with an experienced Salt Lake City property management company. Property managers can help you set the right rental rate from the start using sound research!
Setting the ideal rental rate for any Utah property is especially important if you're renting during a recession, and a lot of factors come into play. Real estate professionals perform what is known as a 'rental analysis.' However, even if you don't have access to all the same tools offered through property management services, you can still figure out how much to charge by weighing a handful of important considerations.
Find Other Rental Properties in Your Market
Setting the rent starts with looking at other neighborhood rentals. This is important to determine what is known as 'market rent' or the current average rent price for rental properties in your area. You can start by combing online apartment search sites like Zillow and Trulia. This will give you a sense of how many rentals are available in your market, and what they typically rent for.
Compare Single-Family Homes vs. Multi-Family Units
Next, go deeper by identifying rentals on the market that are similar to your own. If you're planning to list a single-family home, look only at other single-family homes. Same thing if you're renting out a multi-unit Salt Lake City property. What you're trying to do is analyze comparable properties—they're known as 'comps' to residential property managers—to hone in on the right rent. Look for rentals with similar locations, amenities, features, and square footage to yours.
Keep an Eye on Vacancy Rates
- One factor that many investors forget to consider is the vacancy rate of the local market.
- The vacancy rate is basically the percentage of rentals that are empty in the surrounding area.
A low vacancy rate means most available units are occupied; a high vacancy rate means many of them are sitting empty.
Our Salt Lake City property management team likes to see low vacancy rates because it means that rentals in your area are in high demand—and you can likely set the rental rate higher.
Calculate the Average Rent per Square Foot
Another way to look at rent is to break it down by price per square foot.
- This is pretty easy to calculate if you're able to find a lot of local listings that include the monthly rent and the square footage of the unit. Divide the price by the square footage to arrive at the price per square foot.
- You can then multiply that number by the square footage of your own property to get a ballpark idea of what it might rent for.
Know How Long an Average Rental Stays on the Market
Much like the vacancy rate, the length of time a rental stays on the market can be a good indicator of how in-demand properties in your neighborhood are. Needless to say, when you see a lot of listings that flounder for months on end, that isn't a good sign. What you want is to see rentals that don't stay on the market long before being snapped up.
See the Big Picture
- It's important to look not only at what's in the market right now, but also consider recent months and years.
- Neighborhoods change, and markets have their ups and downs.
- Keep in mind too that many of the factors you're looking at can be seasonal or cyclical.
In places where a lot of listings are vacation rentals, for example, you'll see rents rise, vacancy rates fall, and the length of time on the market shortens during more in-demand seasons. Then during the off-season, things might look a little grim—but it doesn't mean you can't still get decent rent.
Work With a Salt Lake City Property Management Company
Does all this feel a little overwhelming? We understand. Salt Lake City property management professionals use all the factors mentioned above (and a few we haven't even touched on yet) to set rental rates—and all the research and calculations can be a lot to deal with if you're not used to it.
Working with professional property management services takes the guesswork out of setting rental rates. At Reeder Asset Management, we have the tools to perform an in-depth rental analysis that will identify the perfect rental rate for your Utah property.
Contact us today to learn more about our rental price analysis—and all the other tools and services offered by Reeder Asset Management! We make it our mission to help every client get the most out of their rental property, and once you price your rental, the fun doesn't stop there! You'll need to prepare your property for your next ideal renter by writing the perfect listing.
Get started with our perfect Property Listing Checklist!