Picking the right rental price for your Fort Worth rental property does not have to be complicated.
Both underpricing and overpricing your home comes with risks. If you charge a price that’s too low, it will mean less monthly income for you. A rental price that’s below market will also make it hard to catch up; you may not be able to raise the rent to market levels until you’re looking for a new tenant.
You don’t want to charge too much, either. You’ll have a hard time renting it quickly to good tenants. A longer vacancy period is a lot more expensive than a lower rental price.
Properly pricing your Fort Worth investment property requires a deep understanding of the local rental market, and a willingness to do some research. There are a few things you can do to ensure you’re pricing your home correctly to attract the best tenants for your property.
Fort Worth Rental Market and How it Impacts Price
To price your home correctly, you need to study the Fort Worth market and to know what kind of prices it will accept. Perhaps you want to earn $1,300 a month in rent. But, if the properties like yours are only renting for around $1,000 per month, you’re going to have to reset your expectations. Keeping your home at $1,300 will leave you with an expensive vacancy or an undesirable tenant.
Pay attention to the Fort Worth market conditions and get to know the rental landscape. When rental property inventory is low and demand for them is high, you have a little flexibility with your pricing, because tenants will be competing for the best homes. But, when there is a lot of competition on the market, and plenty of homes for tenants to choose, you’ll need a reasonable price to attract the best tenants.
Make education a priority. Learn about the market and its tenants. If you work with a Fort Worth property manager, you’ll have someone watching the trends in the rental market for you. Your property manager rents houses every single day. No one is better positioned to help you price a home correctly.
Size, Condition, and Location: Pricing a Fort Worth Rental Home
The performance of the existing rental market is beyond your control. But, you can control how your property appears. Increase your rental value with these tips:
- Location is tremendously important with real estate. Your Fort Worth property in a good school district will easily attract higher rents from families with children. If your home is close to public transportation or popular commuter routes, you can ask for more than a similar home in a remote area. Focus on your location in your marketing and advertising, especially if your price is a little higher than similar properties in less appealing neighborhoods.
- Property size also matters to your price. In the suburban communities of the Fort Worth area, most renters will be looking for single family homes with at least three bedrooms and two bathrooms. These homes are priced pretty high.
- While you cannot do much about your location or your size, you can control your property condition. When your home is in excellent condition, you’ll attract high rents and high quality tenants. Think about making some minor updates and improvements. A complete renovation is probably unreasonable, but simple updates will work. You can change out the hardware on drawers and cupboards. Improving the lighting or the landscaping can also provide major returns for minor costs. To charge the most rent, your property must be clean, functional, and attractive.
- Pricing your home according to season is real. Fort Worth families with children are less likely to move during the school year. No one will be crazy about moving in January or February, either. Vacancies are longer in winter months, typically, and you may be required to drop your price a little. The highest rents can be charged in May or June.
Talk to a Fort Worth Property Manager about a Rental Market Analysis
Once you know what your property is worth, get to know the competing properties, and what they’re asking. Before you can price your own home, you need to know how it compares to other properties.
This is where a professional Fort Worth property management company can really help. You can request a free comparable market analysis from most good management companies. You’ll get to see what homes in your area are charging, and you’ll easily be able to decide on a good range for your home.
You can do your own market analysis, but your data may not be as reliable as a property manager’s data. Go online and look at rental sites like Zillow, Trulia, and Rentals.com. They will tell you what properties like yours are listed for. However, you won’t have access to what tenants are actually paying for those homes. Just because a home is listed at $1,250 per month doesn’t mean it actually rented for that much.
Compare other properties to your own. Perhaps you have more square feet and a better neighborhood. Those things will allow you to charge a little more. But, if the other properties have stainless steel appliances and two-car garages and you don’t, you’ll have to price your home a little lower.
Follow Your Marketing Results and Respond
Pay attention to how your listing is performing, and you will immediately know if your price is too high. You should be getting a lot of attention for your property once you begin your marketing and advertising. When your home is on the market and you’re getting regular phone calls and inquiries, and prospective tenants are asking to see the property, you’re probably in a comfortable rental range. But, if no one is calling to see the property and no one is applying after seeing the home, either there’s something wrong with its condition, or you might be pricing it too high.
Find a way to evaluate your results. Property managers have software that does this for you. If you want to track your own outcomes, simply collect information on the number of people who are contacting you, how many of those prospects are seeing the home, and whether they’re filling out an application after the showing. This will tell you whether you’re in the right price range.
If no one is applying to rent your home, the price may be the problem. Consider lowering it. Remaining flexible will help. Don’t get too attached to the amount that you want to charge. Losing an entire month or two of rent is more expensive to you than lowering your price by $50 per month.
Property Management in Fort Worth: Rental Price and Tenant Selection
Rental price will impact on the type of tenants you place.
Well-qualified tenants with good credit and income know they will be accepted at any available rental property. They aren’t going to waste their time with overpriced properties. The tenants who are willing to pay more are those who have been denied by other landlords. They probably have damaged credit, low income, or horrible landlord references. Accepting a tenant like that is a big risk, even if they are willing to pay a monthly rent that’s higher than the market will support.
When you’re pricing your rental property, think about your desire to rent it out quickly to a good tenant. A good tenant is the best way to protect your property and your ROI. The long term effects of your price are more important than your immediate monthly income. You won’t earn any income at all if you have to evict a tenant or wait for someone who is willing to pay your price.
Increasing Rent in Fort Worth: Be Reasonable
Most tenants expect that their rent will increase when their lease renews. There are some acceptable reasons to raise the rent:
- The lease is renewing;
- The market supports higher rent for properties like yours;
- Your property-related expenses have gone up; and,
- You’re offering additional services, such as landscaping or internet.
Tenant retention is smart, and you don’t want to chase away good tenants with outrageous price increases. When you want to raise the rent, make sure you can demonstrate to the tenant why it’s suitable, and make sure it’s not an extreme increase.
Good tenants who take care of your property and enjoy working with you will not want to move. But, they will look around and see what other properties are renting for before they sign a lease renewal. Keep your rental increase reasonable, and let the tenants know that the additional rent is consistent with the market.
You can also add value when you implement an increase. Try a complimentary carpet cleaning, or a new appliance. Always give your tenants plenty of notice before you raise the rent, and keep the lines of communication open.
Pricing your Fort Worth rental property is an important part of your success as a landlord or investor. If you need help understanding the market or how to use your price to attract the best tenants, contact us at Specialized Property Management. We’d be happy to help with all of your Fort Worth property management needs.