Top Factors That Affect Rental Prices
How much rental rate should I demand for my property?
Is this rate too high or too low?
What factors should I consider while determining the rental price?
If these are some of the conflicting questions you are battling to get answers to, welcome to this useful guide.
Setting a rental price is a task in itself, hence, cracking the code is essential. You need to consider a range of factors, like market rent price, maintenance costs, and insurance premiums, to name a few, to set the right amount for rent. In this guide, we will discuss more details about the various common factors that affect rental rates and how things are constantly changing in the real estate industry.
What are the Factors Affecting the Rental Rates of the Property?
Even though considering the expectations of the target audience along with market supply and demand is vital in defining the rental prices of the property, there’s plenty more to look at.
Yes, setting the rental price depends on many other factors. Let’s discuss them:
Location
A property situated near exclusive suburbs, posh, and urban areas will always garner higher rates as compared to the countryside and off-beat locations.
But how can the location impact the rental rates so much?
Let’s understand this with the following aspects:
The location helps in setting the baseline rental rate
Locations with close proximity to schools, hospitals, supermarkets, parks, and public transportation generally have spiked rates.
The renters will charge more if the area is clean and maintained with a low crime rate.
Lastly, properties well connected with city centers or hotspots would have higher demand as compared to ones that are farther away.
Overall, if the location is convenient and reduces the commuting time, the rental rates will command higher prices.
Size
The size also impacts the rental prices in its own significant way. In a way, larger properties offer more functionality that creates extra space for the guests and personal and other recreational activities.
For instance, standalone houses or luxury houses have increased rent due to the privacy they offer. Similarly, when the property has more living space and extra features, the rental prices are prone to be higher.
Lastly, the views and natural light matter as well, when the area is spacious and receives more natural light and sunrays, the demand will be higher, and so will the rental prices.
Condition of the Property
The state of your rental property is another major element in setting the rental price. The newer properties with modern designs and other energy-efficient features help in catching more rates than the older, under-maintained properties.
Furthermore, if you, as a landlord, regularly update your property, you can surely justify your higher rent. From fresh paints to new appliances and fixtures, everything counts in the update. Lastly, amenities like a washer, dryer, in-unit laundry, and air conditioning can help you grow your income as a landlord because now you can definitely charge more from your rental property.
Economic Factors
Well, if we talk of the local economic trends, they can sway the rental prices a lot.
Firstly, if the property is in an area with a thriving rental market, it’s obvious that the rental prices shall shoot.
Secondly, if we talk of the higher average income neighborhoods, they support higher rental prices.
Lastly, the market might face some inevitable economic downturns. In this case, the tenets might need to downsize. The relocations to more affordable areas will reduce the rental rents due to potentially lower demand.
Laws and Regulations
It's crucial to study and go through the state and local laws if you are renting your property and thinking of pricing it. Government policies influence the rent as there are some rent control laws that limit the amount of rent that the landlord can charge from the tenants. Apart from that, many areas also have tenant rights, as this can directly impact the rental prices in a way.
However, no matter the stricter state and local laws, adherence to these regulations ensures a strong tenant-landlord relationship, and you can present yourself before the court in case of any mishap.
Additional Factors Affecting Rental Rates
Besides the cliche factors, we have some more agents that can affect the rental rates in many ways. These are as follows:
The number of bedrooms and bathrooms on your property
Pet-friendliness with certain breeds
Multiple parking
Lawn
Lease terms and conditions
Furnishings
Storage, appliances, and other amenities
Final Thoughts
It’s vital to be well-informed of these key elements beforehand to make the best choice for your rental price. Analyzing not only the visible factors but also the invisible and underlying costs can make you alter your decision. You will have to remember your priorities and determine what matters most to you before deciding on certain rent.
Hence, once you consider all the above-given factors, you can shortlist and be prepared to make an informed decision for the best rental price suitable for you.
