Property Management Overview: Establishing Rent Schedule
Establishing the Rental Schedule
What will your unit command on the open market? Can you get more if the property is in better condition? What would it cost to put it in better condition? When was the rent last raised? Is there a shortage or abundance of competitive properties in the rental market? What are your competitors doing to rent their properties? The answers to these questions and more are required to effectively manage your property.
Remember that the value of income property is directly related to the income the property produces.
Owning and managing a rental property is like running a business. You must maximize income and minimize expenses. Keeping up with the rental market and keeping your unit rented is imperative. You don't, however, want to rent to just anyone. The poorly selected tenant can cause you the great legal expense and even dampen your enthusiasm for owning real estate!
So how do you establish market rents? It's easy. You call on available rental properties, comparing yours to the competition. You see, it all boils down to the law of supply and demand. Points of comparison are:
a. Number of bedrooms and baths
b. Square footage
a. Appliances - which ones?
c. Carpets, drapes, etc.
3. Who pays utilities
a. Gas and electric
4. Length of tenancy - that which is most desirable depends on your market
a. Month to month
b. Lease for six months to a year
How do you find out all this information? You call and ask. You should have had a pretty good idea before you purchased the property. Fair market rent changes depending on market conditions. You must keep up with the market, increasing rents as appropriate.
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