If you’re considering renting out your house, it’s important to decide on a lease that will cover your costs, make you a profit, minimize vacancies and supply value to your renters. It’s tempting to ask for a very high rent–and occasionally you will find someone who will cover it–but normally you will need to appeal to a wider market by charging a lease more in line with the market worth.
The key factor in determining your home’s rental cost is its assessed value. Real estate adviser Steve McLinden of Bankrate.com recommends inquiring at least 1.1 percent of your home’s worth up to $100,000, 1.0 percent for another $25,000, and much less than 1.0 percent for the rest. This factors in these variables as wear and usage, in addition to the length of time your house goes empty in between tenants.
Amenities and Grounds
It is possible to ask a higher lease for anything you supply in addition to the house itself, such as an outside deck, a scenic view, a swimming pool, a home gym, a dishwasher or a backyard park. The worth of this premium is a judgment call that reflects both the extra value you’re providing to tenants and the extra costs you keep as a leading to maintaining, repairing and replacing the additional perks. If you lease your house fully furnished, it is possible to ask a much higher lease, roughly double what you’d ask for an empty house–and much more if you have high-quality furniture and expensive decorations. In the event your house has the contrary of conveniences, such as dysfunctional plumbing or a shabby lawn, the same logic applies in reverse: Ask a lower rent to offset these unappealing features.
You need to correct your lease to reflect the regional rental economy. If rental houses in your neighborhood are moving unoccupied, then it makes sense that you correct your lease downward so as to become more likely to attract a tenant. If rental housing is in short supply, you can ask for a higher rent. Generally, in a low-demand economy you might need to reduce your lease by one-third to one-half as compared to a high-demand economy.
The desirability of a place is tricky to quote. One renter might place a premium on a place close to bus lines, coffeehouses and museums, while another might place a premium to a secluded, quiet property with no trade nearby. You can twist your advertising so as to appeal to people who will be more inclined to place a premium on the location of your house. Some factors are unspinnable: If your house is next to railroad tracks or a sewage treatment plant, you will need to ask a lower rent in order to remain competitive.
You may expect to accumulate a premium for shorter rental durations. This reflects two purposes. First, it reflects the fact your own costs are raised due to needing to clean and prepare the house more frequently. Additionally, it reflects the price of a greater frequency of jealousy. Second, it reflects the different nature of short-term versus longterm housing. Individuals that are renting for the brief term are usually doing this for some special event, in addition to their inherent need for living space. This makes the rental value more, to the tune of 10 to 50 percent depending on the length of the rental, compared to a long-term rental of six months or more.