If you want your rental property to be successful, it is essential to find the right rental price for your area. While rent that is too high will price you out of the market, you can also miss out on potential profits by setting your rental price too low.

Our Henderson and Las Vegas property management experts share what you need to know about pricing your rental property to optimize your income and avoid long vacancies.

Do Your Market Research

The first thing you want to consider is how the rental market in your region is performing. When there is a high demand for rental homes or apartments and not enough supply to meet that demand, prices will typically go up. People are willing to pay more for rent when there are fewer options available in a desirable area.

On the other hand, low demand and a surplus of vacant rental properties mean you may need to lower your rent price to stay competitive and find tenants. There are several reasons for rental markets to cool down, such as:

• Oversaturation or an influx of new rental options
• Economic and affordability challenges
• Increase in home buying versus renting
• Seasonal rental demand drops

If your rental property is located in an area that sees seasonal fluctuations in your rental market, that is definitely something you want to take into account when pricing your rental rates. Landlords in vacation destinations or college towns can generally increase rental rates during in-demand months when people are willing to pay more.

Take a Look at Your Competition

Another helpful way to find your pricing sweet spot is to do a deep dive into your competition. What rental properties around you are comparable in size, age, condition, and amenities? Which ones are attracting your target audience? Seeing what they are asking for and comparing that to your rental price can tell you if you need to make adjustments.

If your rental rate is comparable to the competition, you can also offer incentives that may give you an edge over similarly priced properties, including:

• Free first month’s rent
• Free parking included
• Flexible lease terms
• Waived fees
• Acceptance of pets

Calculate Your Rental Property Expenses

For most landlords and property owners, the reason for having a rental property is to make a profit. Unfortunately, the cost of maintaining and leasing the property can cut into your income if you are not pricing your rent to cover your expenses. Examples of common landlord expenses include:

• Maintenance and repairs
• Mortgage
• Insurance
• Property taxes
• Utilities
• Home inspections
• Marketing and advertising costs
• Vacancy costs

Keep detailed records of your expenses to get an accurate projection of what you expect to spend every month. If your rent price is not enough to cover that, it is time to make some changes. While that might be an increase in your rental rate, you may also want to focus on lowering costs. Working with professionals, such as a property manager and experienced digital marketing expert, can help you get expenses under control.

Know What Adds Value to Your Rental Property

Although comparing your property to the competition is helpful, no two properties are exactly the same. You do not want to undervalue yourself when you have more to offer than other rental properties near you.

When you are determining what price is right for your rental property, remember these factors that can have a significant impact on your value:

• Curb appeal
• Proximity to shopping and entertainment
• New appliances
• Number of bedrooms and bathrooms
• Accessibility
• Amenities
• Eco-friendliness

These small details can add up to make your rental property more appealing and, ultimately, worth more to potential tenants. You may be able to ask more for rent than rival properties while still staying competitive.

Consider Your Tenant Pool

The types of tenants you are renting to will also impact how much you can charge for rent. If you are marketing to active retirees or single professionals who have more disposable income, you could get top dollar for your rental property. However, college students or working families may not be able to afford as much.

Additionally, consider the quality of applicants your property attracts and who you are willing to accept as a tenant. While some tenants are responsible, pay rent on time, and take care of the space, you may have to deal with less-than-ideal renters who put a lot of wear and tear on the property. In these cases, you will need to factor in probable repair costs and heavy turnover rates when determining rent prices.

RELATED: 6 Reasons Why Tenant Screening Is Important

Evaluate Your Rental Vacancy Rates

Your current vacancy rate is also an indicator of whether your rental price is appropriate. Higher vacancy rates or long periods between signing a tenant could mean the rent for your property is too high and pricing you out of the market. You may want to consider adjusting your rental rate to be closer to competing properties in your area.

However, strong demand for your rental property with a high volume of applicants between leases may be telling you the opposite. It is possible that you are charging too little and missing out on your property’s full potential. Increasing your rental price could boost profitability and help you get the most return on your investment.

Work With an Experienced Property Manager

Being a landlord comes with a long to-do list that can quickly become overwhelming. Along with screening applicants, handling maintenance and repairs, collecting rent, and communicating with tenants, setting the right price for your rental property takes time and resources that you might not have.

By working with a skilled property manager, you can streamline your operations and simplify the leasing process, freeing up more time to focus on what matters most to you. At Black & Cherry Real Estate & Property Management, we offer comprehensive property management services in Las Vegas and Henderson, led by experienced professionals who understand the market.

Contact our property management team to learn more about how we can help you maximize your rental property’s potential!