Why Rental Pricing Strategies Are So Important

What to Consider When Pricing Your Home for Rent

Rental pricing takes into consideration many external factors. First of all, it is essential to understand the rental market where your property is located. This will help you maintain a competitive edge with other rentals in the area. Is the area growing or shrinking? What jobs are available nearby for potential tenants? What economic factors could impact home prices and rental rates?  What time of year are you going to start renting out your home?

Another factor to consider is your personal cash flow. Decide what level of profitability makes the rental worth the effort. It’s also crucial to factor in management fees (without overpricing the home). Next, ensure the rental has a positive cash flow. Evaluate amenities in the home and in the neighborhood. In our area (Kitsap County), it's also important to look at your home's proximity to the Naval bases and the ferries. Many people look at housing options in relation to their potential commute time. Understanding the value of various amenities and nearby conveniences will help you properly price the home and attract tenants.

Why Pricing Matters

Pricing is also important from a legal standpoint. First and foremost, there are laws that must be followed when renting out a home. Every landlord should have an understanding of local, state, and federal fair housing laws. Regulations vary by state. For example, Washington has specific laws in regard to how security deposits are assessed, held and returned to tenants. Other laws may apply to pricing strategies, such as late fees or charging for damage. Rent increases, lease terminations, or evictions require very specific guidelines to be followed.

Therefore, it’s essential to consider all these legal factors when pricing your home for rent. Awareness and compliance with the laws are one of the biggest benefits of utilizing a property management company. If that is something you are considering, check out our experts here at Windermere Property Management.

How to Find the Correct Price for Your Rental

There are several different pricing methods that a landlord can choose from when listing a rental. For example, you might decide to post a rental rate that is competitive with the market and also includes extras (such as certain utilities) in order to provide additional benefits and potentially rent it out quicker. Landlords who are looking to fill a vacancy quickly might opt to list the home below market rate. Measures can be outlined in the lease for rental increases over time. Conversely, the rental may be in a highly desirable area offering many amenities. In that case, premium pricing might be a smart financial move. Alternatively, you might decide to strategize your pricing by offering flexibility. With this strategy, the landlord and potential tenant have the option to negotiate different elements and terms of the lease. Whichever pricing strategy you use, it’s imperative that you research the rental market and fully understand landlord-tenant laws in your area.

What Happens if the Pricing is Off?

If a home is not priced properly, you run the risk of two problems. First, if the rental is priced too high, it could sit unoccupied for an extended period of time. Conversely, if a unit is priced too low, you run the risk of not maximizing potential earnings.

If you know how many months of lost rent in an unoccupied property can be offset by a premium price, perhaps that pricing strategy is worth the risk. If you’re okay renting slightly below market value to attract a long-term renter, perhaps the money lost each month is worth the lack of turnover. Each person has their own way of looking at the pros and cons of a pricing strategy.

Benefits of Properly Pricing Your Rental

Ultimately, the goal is to identify the proper price point that will get your home rented out quickly to tenants who will respectfully maintain the property. If you’re struggling to figure out pricing strategies and market trends here in Kitsap County,  Windermere Property Management is a valuable resource. Our team of experts can help increase your profit and take the legwork out of managing a rental. Not only will our property managers help you pinpoint an appropriate pricing strategy, but they can also list the home, screen potential applicants, and take care of maintenance and repair work.

While preparing your property for rent, consider which of these pricing strategies works best for you. You can also reach out to a local expert to ensure everything from pricing to lease signing goes smoothly.