Supply and Demand Apply to Your Rental Rate, Too!
One surprise that many new landlords discover is that there is no such thing as a "standard" rental rate for a particular size of home—even within a given Central Florida neighborhood or town. Instead, the demand in your area is a significant aspect of how much you can charge for your rental, as well as how your rental property measures up to others in its class of properties.
Setting an excellent rental rates in Orlando FL is important because it is a constant balancing act: if you place a rental rate too low, you are leaving potential income on the table and cutting into your profits. If you set your rate too high, you may not receive enough tenant applications to avoid chronic vacancies as tenants attempt to move to less expensive homes. The ideal price will give you the highest possible return on your Orlando investment property through both a competitive rate and a very low vacancy time. How do you get there? A market analysis with our Orlando expert property manager is the safest way to go.
Aspects of a Market Analysis
Market analysis refers to getting a defined picture of the demand and supply of homes in your area, relative to the prices that are being charged in that area. When you understand your market and the place your rental property occupies within it, you have a much better idea of how to set your rental rates in Orlando FL. Here are some questions to ask yourself as you work to establish a price.
1. How much of the market are rental homes?
One major factor affecting the rental rate is whether or not most people in your area own or rent. If there are very few homes available for rent, coupled with an influx of new residents, you are probably in a prime rental market. However, if many people have noticed the opportunity of becoming a landlord, there may be more rental homes than interested renters at this point.
2. What are the percentages of single-family residences versus multi-family units?
Different neighborhoods have different mixes of single-family residences versus multi-family units, and the percentages of them can affect how much you can charge for single-family homes. Your research will help you understand whether there is a high demand for multi-family apartments or high demand for single-family residences and whether your particular property is benefiting from increased demand or hurting because of oversupply.
3. What is the vacant versus occupied rate in your area?
This statistic is particularly helpful in figuring out whether or not you can charge a higher rental rate. If your area is nearing full occupancy, it is indicative that there may be more people looking for a rental home than can find one that fits their needs. If there are lots of vacant locations, however, you may need to lower your rent to compete.
4. What is the rent per square foot in your area?
One measure that helps people compare the many kinds of rental properties is to assess rent per square foot per month. If your rent is higher than this average, you'll want to have other reasons why this is worthwhile, such as easy walking access to trendy areas or being in a great school district.
5. What are the average application fees in your area?
Make sure that you don't miss out on great potential tenants just because your fees are out of proportion with the general rental rates in Orlando FL! If you want to get more applicants, you can lower the fees beyond your competitors, but recall that these fees should still try to cover the cost of screening any potential tenants.
6. What is the average number of days on the market for properties in Central Florida?
The Orlando market is likely to be in favor of the landlord if most properties are being snapped up immediately; a sluggish market that makes landlords wait may indicate an oversupply of properties. Knowing this metric can help you figure out whether to offer a deal on your property or to take advantage of the speed with which renters are choosing properties.
Orlando Property Managers Understand the Rental Market
One of the best ways to set your "not too high, not too low—just right" rental rate is to work with an Orlando expert property manager. With various properties under management, property managers in Orlando keep a finger to the pulse of the housing market at all times to make sure they keep vacancy rates where they should be—and rental income steady! They also will work on details like application fees to ensure you get the right tenant applications and rent your property quickly; take advantage of our Orlando expert property manager's expertise by working with them to rent your property! A great place to start finding your ideal property management company is to sign up for a FREE rental analysis from Verandah Properties to learn more about the hidden value of your investment—and how we can help maximize its potential!