How To Price My Rental Home Competitively?
Understanding your rental market can help you figure out how to attractively price your rental to generate better prospect interest and lower vacancy costs.
This process can feel like two opposing forces – on the one hand, you want to make the most money possible, however, pricing too high will discourage renter prospects from contacting you. Today’s post will focus on what resources you can leverage to price your home competitively on the rental market.
Scope Out Your Neighborhood
Online listing platforms have made information that was largely held by real estate agents now available to the public. Top sites like Zillow and Trulia have millions of rental listings. We recommend you start by taking a look at the competition in your neighborhood. Pick a few listing sites such as Zillow and Trulia and filter the available homes by zip code, bedroom, and bathroom size. This will yield a better sample size because the results will more closely match your home specs and the zip code will narrow the results to homes within your neighborhood.
The old-fashioned way can yield results too. Check your local newspaper or call properties with for rent signs.
Once you collected rental listing prices for several similar properties in your area it’s time to find the average between them. No two homes on the rental market are identical, but identifying a baseline using similar homes nearby will give you a more accurate price range.
Admittedly, this process can be time consuming but those hours of research will give you more depth into who is currently renting and how those homes compare to yours. This better reflects what the market will absorb so you can figure out how much rent to charge based on your competition’s pricing.
Other free resources to consider are automation tools like Zillow’s Zestimate or Trulia’s Real Estate Market Trends. Although the information won’t be as detailed as your search above, the results from these reports provide a great overview of the market. Here you’ll find insights such as historical median rents, number of rentals, and in the case of Zillow’s Zestimate, their recommended listing price on the rental market.
If you’re home has been on the rental market for over a week and you still don’t have any showings, then it’s time to reconsider your price. Renters have access to information on-the-go, so if a similar property is more attractively priced, they will go with your competition.
Developing a pricing strategy will help avoid high vacancy costs. Our CMO, Chuck Hattemer, covered cognitive biases in pricing your rental and how to develop a fair strategy.
You don’t have to take extreme measures like undercutting your neighbors, instead, stay updated on your competition. Stay aware of the number of similar homes that are added, how many have rented, and at what price. And if during your search you realize similar properties are offering incentives like move-in discounts, try to match your rate or offerings to that (assuming the rate is still fair).
Our Recommended Solution
Onerent’s mission is to deliver a simple and efficient rental experience that everyone can trust. Our strategy is to lease the property at the best rate possible, while keeping in mind vacancy costs. We’ve developed a market analysis tool to give our clients an edge.
Technology and automation is finally making it’s way into real estate, and with that comes collecting data to apply predictive analytics.
“Predictive analytics will be huge. Many industries have already adopted this, but real estate has been slow to the game. Yet, there is powerful data available that could help you better manage your portfolio. Those real estate investors that harness the power will be ahead of their colleagues.
CEO of Stratafolio, CEO of AssetRover
Onerent’s market analysis tool will search nearby listings for you. We’ll compile this data and generate key summary stats like the median rate and a recommended rental range based on current similar properties nearby. We’ll also expose all of the listings we selected, including: the individual price, property details, and listing links to give you the most depth into your rental market. This level of transparency and granularity is something that many other rent estimate tools won’t provide.
As mentioned, the market rate will fluctuate as new properties are listed and when rental rates change. Onerent’s Market Analysis Tool will help you stay aware of the competition and make proactive recommendations so you can limit vacancy costs.