Tips For How A Property Manager Can Set The Price When Renting A Condo Unit
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By :
Christine OKelly
Submitted
2008-11-21 12:25:56 |
While it is easy to pick a random number out of the air, add a few zeros, and set that as the price for renting a condo unit, it isn't the most profitable strategy. If a property manager or owner prices a condo rental too high, it will be difficult to find renters. Pricing it too low will also cause problems because the owner can end up losing money, essentially paying the renter to live in the condo. The answer is finding a happy medium between too pricey and too cheap to ensure a successful rental for all parties involved.
Setting The Rent When Renting A Condo Unit
Regardless of the type of rental, the owner or property manager still have a number of mandatory expenses. Make a list of these expenses, add them up, and divide the number by twelve to come up with the per month costs for the rental. This amount must be collected monthly to break even when renting a condo unit.
Some real estate investors then add the amount of monthly profit they want to make on the rental. This provides you with a goal and may be close to a reasonable amount of rent, but not always. You may have to adjust your monthly profit goal if the rent amount is too high or too low for what the rental property is worth as compared to the area.
Compare Against Other Rentals
There are probably more people renting a condo unit in the area of your rental, so compare yours against the competition. People looking to rent a home will also compare to determine their best option, so by doing this, you'll be one step ahead of your prospective renters. When setting a price for the property, an owner or property manager should compare the convenience, size, and amenities of their rental to other similar rentals to help determine a reasonable amount of rent. Once you have a price that fits comfortably into the market, make sure you are still turning a profit at the price point and adjust accordingly.
Pricing High When Renting A Condo Unit
While an owner or property manager usually looks to set a reasonable price, some set their rental price high at times on purpose. Low prices can undercut the competition if your rental has fewer amenities and lower mandatory monthly costs than other area rentals, but higher prices also draw renters looking for the feeling of prestige and luxury. The drawback is that by pricing high, your rental needs to provide this prestige and luxury in the form of additional amenities, a prime location, a great view, new appliances, and more.
After setting the rental price, reevaluate it on a yearly basis using the same techniques. When renting a condo unit, a property manager may want to record the rent amounts of surrounding rentals, in addition to how the price was determined and why a new price may be warranted. This eliminates concerns for tenants and builds trust that leads to happy renters and a profitable real estate investment. |
Author Resource:-
Christine O'Kelly writes for Beal Property, LLC, Chicago property manager providers. Beal Properties has over 80 years experience renting a condo unit in Chicago's historic lakeside neighborhoods.
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