Are you experiencing long vacancy times for your condo for rent in DC? How is your cash flow? When the monthly rental price is too high or too low, real estate investors lose money and struggle without enough cash flow.
You might have a "goal" rental rate in mind for your rental, but is that goal realistic? Setting the price too high doesn't often put more money in the pockets of rental property owners because renters are savvy. They won't overpay for a rental home when they can pay a lower and more competitive rate for a similar house nearby.
However, when the rent is too low, you lose money every month—even with a resident that pays the rent on time. Without enough cash flow, DC investors can't cover expenses or add income to their long-term financial goals.
What's the ideal rental rate? Apply these expert tips to find it for every property in your portfolio.
Use Rental Market Analysis
Identifying the ideal rental rate for your condo for rent in DC starts by running the numbers and researching the market. By comparing your property to similar rentals in the area and understanding current rental trends, a property manager can help you set the best rate to maximize income and ROI.
What information do real estate investors need to conduct rental market analysis? Thorough research is worth the effort for your bottom line. Your analysis should include:
- Knowing how many rental homes currently exist in the market
- Of those rentals, understanding how many are single-family rentals (SFRs) vs. multi-family rentals (MFR)
- Insight into how many rentals are currently vacant vs. occupied
- The average rent amount per square foot in the DC market
- The average application fee and security deposit amounts for rental homes
- How long-vacant rentals stay on the market (on average)
Applying this information helps investors understand an appropriate range for a property's monthly rent amount. Investors can also factor in recent property upgrades and amenities that might justify a rate at the higher end of a research-supported range for your rental.
If the price you had in mind is too high (or too low), use rental analysis information to guide you to the best rate. It's better to let data drive the best rates for your condo for rent in DC than pick a rate that puts your rental out of contention for the best renters in the area.
Adjust Rates at the Ideal Times
When rental properties offer what renters want at the right price, real estate investors make more money. Staying competitive requires keeping up with current data and adjusting the monthly rent price (reasonably) when it's time for a new renter or lease with an existing resident.
If you run a rental market analysis on one of your current rental properties and discover that your property is overpriced (or underpriced), it's time to consider a rate adjustment. However, before you email the renter and let them know the new price that takes effect when the rent is due next month, let a property manager help you make adjustments at the ideal time.
Adjusting the rent for your condo for rent in DC at the wrong time and in the wrong way can cause renters to leave. It might also violate the law. A property manager guides investors to:
- Recognize when the market supports a change in the monthly rent amount
- Apply a reasonable increase for existing renters while avoiding a significant increase they can't afford
- Make a rate adjustment when it's time for a resident to renew their lease (not mid-lease)
- Inform renters of a new rent price with plenty of time for them to plan for the adjustment
- Handle a rate increase with compassion to help more renters renew
Most renters expect their monthly rent to go up when it's time to renew. With excellent property management and renter care, your best renters will absorb a reasonable increase and continue enjoying your property. Increasing the rent is also smart when a renter doesn't renew, and it's time to find a new resident for a new lease.
A Property Manager Sets the Ideal Rental Rate
Generating the income you need from your condo for rent in DC requires the ideal rental price. However, if it seems like a lot of work to conduct rental market research and work with residents when it's time to raise the rent, let a property manager handle it for you.
EJF Real Estate Services has the experience you need in the DC market. We understand what renters want (and will pay for), and we maintain current market information to guide us to the "Goldilocks" or "ideal" rate for your rental properties. If you're losing money on a property or researching a potential new investment, let us help you maximize your returns with rental market analysis.
With the ideal rental rate, you're ready to market the property. Click to download our free Property Listing Checklist.