4 Tips to Find the Best Rental Rate for your Profits in Real Estate

One of the things alot of fellow enlightened wealth instititute students ask me is ‘what should I rent this out for to maximize my cashflow?’  Setting the right rent can be one of the most difficult areas for many people who are investing in rental property. If your property rents out in no time, it could be an indication that you are not charging enough rent.

On the other hand, if your property seems to take a long time to rent out, it could be a clear indication that your rent is too high. So, how do you go about setting a rental rate that is in line with the current market?

1. Get looking in the newspaper first and do some local research to find out what kinds of prices are driving the local market. Location, location, location is the most important factor in determining rental rates. For example, a three bedroom, one bath home in one part of town may rent for a $750 a month while another property on the opposite side of town may only be able to draw $500 per month. Most prospective tenants look for convenience when searching for a rental property. They are either looking for a location that is near their work or close to their children’s schools. Neighborhoods that are considered to be trendy or hip can also be a driving factor, as many people like the idea of living in certain neighborhoods.
2. Size Does Matter!  Due to the fact that most renters have needs that must be filled, especially in terms of space, it is quite common for square footage to also play a role in determining rental rates. This means that larger homes and units will typically be able to rent for rates that are higher than smaller homes and units.
3. Keep in mind the “Rent vs Buy Option” for your prospect.  It is also important to keep in mind that there is a certain point when rental rates can reach a cap. When interest rates are low, if rental rates rise too high, renters will quickly make the connection that it just does not make sense to rent any longer when it could be less expensive to buy a home.
4. Join a local association for landlords. This is a great way to make sure that you keep your finger on the pulse of the local rental market. Emerging trends in the area will affect not only you but also other landlords as well. For example, if your particular area is in an economic slump or even an economic boom then this could have an effect on local rental rates. Make sure you keep track of whether there have been job losses or the creation of new jobs in your local area.

The above four tips are often the answers I give to my fellow enlightened wealth institute students and should allow you to maximize your cashflow!