As a landlord, the most important aspect of any rental property is rent. You know you have to charge it, and the tenant knows they have to pay it. But that doesn’t mean everything surrounding rent is cut and dried.
Determining the right amount to charge for rent can determine the type of tenant you get. And when is the right time to increase rent? And by how much? A number of factors can go into this process, but it can make or break the experience you have with the property. Rent that is too high might leave your property vacant, but rent that is too low might not bring in the right tenants.
Balancing the most profit with making the price right for tenants is an issue all landlords face. Looking at a number of factors can help you zero in on the correct price for your Castle Rock property or other Denver Metro area property. It’s a good idea to investigate if there are other comparable properties in the same area, and checking in with other property managers in the area can provide some insight.
It’s also important to take into consideration the average income of the people living in the area of the rental property. Of course, the rent needs to cover the mortgage payment for your rental property, and other similar costs associated with it. Another consideration must be everything that’s included with the property, including if you use a Professional Property Manager. Does it include a security system? Is there a garage or designated parking? Is it located in a neighborhood that has a lot to offer?
Every landlord wants to make as much money from rent as possible, but that can be tricky. Nobody wants to lose a good, long-term tenant because they got priced out of renting the property. Knowing the tenant’s financial situation goes a long way in determining the timing of a rent increase.
If a rent increase is going to be too much for your tenant in your rental property, it might not be worth it. If it causes your tenant to move, how quickly will you be able to fill the vacancy? And what will it cost to ready the rental property for the next tenant?
If it takes a couple of months, or longer, to fill the unit, will the rent increase make up for the lost revenue from those months of vacancy?
Increasing the rent on your rental property is also determined by the market. Rent increases can be justified by a number of things. From increased costs for utilities, maintenance, insurance, property taxes or a multitude of other things, all can affect your bottom line. Make sure you’re charging enough, and if an annual increase is expected, make sure to give your tenants the proper notice.
The correct rent can make life a lot easier for any landlord. It can help keep tenants stay longer, and can help make the vacancy short-term when those tenants leave. It has also proven to diminish late rent payments, and can help keep the tenant-landlord relationship remain positive for the duration of the tenant’s residency.
For more questions about whether or not you’re charging the right rent for your rental property in Highlands Ranch or anywhere else in the Denver metro area, contact Jim Shots at PMI Elevation today.
Photo by Tim Sullivan from StockSnap
