The question of how to determine rent rates comes up often, especially in a market as saturated as the Greater Phoenix area. You could gaze into a crystal ball for the answer or read at few ideas we've collected over the years. Your choice.
Ask The Vacating Tenant:
Your current tenant can be a wealth of information. Tenants often know the market better than landlords. They often have friends who are renters in the area and probably monitor the rent rates in the neighborhood.
Knowledge is Afoot:
Walk the neighborhood. You'd be amazed how much you can learn by walking around the area your place is located. Rental signs on other properties often have amounts and certainly a phone number you can call. If people are outside working on cars, playing and such you can ask them what rents are like in the area... don't wear fine duds unless it is appropriate for the area.
Keep Your Comps Relevant:
Some people use apartment rates to determine single family home prices and visa versa. They are not the same animal. At the same time, it can help give you a sense of the competition.
Is Your Phone Ringing:
A silent phone is often the sign of too high a price. Be proactive and lower the price in small increments often until you start getting calls.
Greedy Can Kill Over Time:
Turnover is one of the biggest causes of lost cash flow... unless you get the tenant from hell you Craig's Lists all your cabinets, appliances and such. If a tenant feels he or she is paying way above market value they will not stay long. They'll shop around and find a better deal. Since loss of rent, turnover repairs and marketing are costly, you may want to balance those costs in our rental rates. In a competitive market you may not want to do annual rent increases. This may be tough for the old timers who are used to 3 - 5 percent increases each year but we're not in Kansas anymore Dorothy.
Check Online Comps:
Craig's List and Rent.com can give you insight into current market values. Stop at your local grocery store too and pick up a few of the rent magazines. This is something you should do every 3-4 months so you keep your pulse on neighborhood values. If rents have dropped in your area substantially, you may want to lower the rate to encourage your tenant to stay another year or two. Remember to keep you eye on the long term value of renters who stay with you for many years.
Know Thy Neighborhood Property Managers:
Do you know any property managers in the area. sure they might be the competition and they also can be invaluable help. A cup of java or a happy hour toast can be just the right thing to nurture a relationship.
We hope these ideas are helpful to you. Keeping your investment rented with quality tenants is the name of the game and proper pricing plays a major role.
Best to you,
