With the trend for fewer vacancies and higher rents continuing for the most part from coast to coast, you may be tempted to raise your rents in order to maximize your profits during this period of good fortune for property investors, landlords and management companies. While we are all in business to make money, it’s important to not get over-excited or greedy, as unbridled enthusiasm could lead you to price yourself out of the market.
So be sure to educate yourself about when it is appropriate to raise rents and when being overly ambitious could set your business back during this time of golden opportunity.
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Know what your market will bear
If you set your rental rates too high in comparison to the other properties available in your community, you are setting yourself up for longer than normal periods of vacancy, as well as high turnover from tenants who begin to consider a less expensive places to live.
Make sure that your rates are in line with properties that are similar to yours. If you do charge a premium, make sure that you are offering the features and amenities to back it up, and that you effectively promote them in your rental listings and showings.
Know what people are willing to pay more for
Location, Location, Location
Location was, is and always will be the number one factor that attracts people to a property. People are likely to pay more when a location is desirable to them in some way. What will motivate them to pay more will depend on their demographic and personal preferences, but the most common attributes are proximity to transportation, shopping, food and entertainment.
A Shiny New Penny
Almost everyone wants to enjoy beautiful surroundings. If they fall in love with the appearance of your property, they will likely be willing to pay a premium for the opportunity to live there. These days the majority of people are drawn to clean and uncluttered open concept spaces with updated kitchens and baths, hardwood or tile flooring and plenty of natural light. And of course it’s highly recommended to re-paint in trendy but neutral colors between renters, to give the property a fresh and clean appearance. If your property has trendy upgrades such as stainless steel appliances, spa-like bathrooms and smart home technology, it will be even more appealing to prospective tenants.
A Place for Milo & Otis
Never under-estimate the power of people’s emotional attachment to their pets. With over 62% of American’s owning pets, you will find many responsible pet owners who are willing to pay more to live in a nice place that welcomes their 4-legged best friend(s). It might require a little extra work to protect your property from potential damage and ensure the comfort and safety of neighboring residents, but the extra income could make it worth the effort. Also keep in mind that because of the limited inventory of properties that allow pets, tenants with furry family members are likely to stay longer, which is a huge bonus for your bottom line.
A Natural Connection
People of all ages and walks of life feel happier when they are closer to nature and can breathe fresh air. Outdoor space, whether it is included on the property or is in close proximity to it, is a highly desirable feature that people may be willing to pay a premium for, especially in urban areas.
In-Demand Features and Amenities
Here is a list of additional features that are highly attractive for people and could sway them to choose your rental property over other less expensive options:
• Parking (onsite, more than 1 space)
• Laundry facilities (either in unit or building)
• Dishwasher (who actually likes doing dishes?)
• Newer appliances (make sure they match!)
• Ample closet and/or storage space
• Large windows / natural light
• High ceilings
• Air conditioning
Many of the features and amenities described in this post are typical of mid to high-end rentals, which are in high demand at present. Do your properties fit these descriptions? Or could they use some renovations to bring them up to today’s more discerning standards?
When considering whether you could be charging higher rents, remember to do your research on what the market will bear, and be fair in what you are charging by providing the value to back it up — then everyone will get what they want.
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