The rental market is hot, but be realistic when setting rental prices.

It’s no secret that the rental market in the U.S. has seen incredible growth in the past decade. Rental prices have steadily increased 3-5% annually, with an average increase across the last decade of about 3.11% year to year.

From millennials to retirees, more and more people are choosing to rent rather than to buy. The steady growth of the rental market tempts some owners to think they can charge top dollar. But that’s not necessarily the case. The market may be hot, but you still need to take several factors into consideration to arrive at a fair market rent value for your property. 

6 Factors that Impact Rates
There are a number of factors to consider besides the popular “Rent Zestimate” as you determine your rental rates.

1. Number of bedrooms and bathrooms
2. Property amenities included (e.g., utilities, lawn maintenance, internet/cable, trash service, etc.)
3. Parking (e.g., no parking, 1-car garage/2-car garage, covered parking, assigned/designated parking, number of spaces)
4. Community/neighborhood amenities included (e.g., pool, fitness center, walking trails, recreation room, laundry facility)
5. Appliances (e.g., refrigerator, microwave, dishwasher, garbage disposal, appliance age and color, electric or gas)
6. Pets (e.g., are they accepted, how many allowed, breed restrictions, weight, age)

Walkability Score
In addition to these six key factors, another factor that affects rental rates is a property’s “walkability score.” A walkability score is determined by the property’s proximity to such things as shopping, parks, schools, restaurants, nightlife/entertainment and transportation.

Research Other Properties
Finally, don’t forget to research comparable properties.

Knowing the answers to the six key factors mentioned previously (these are also key items you’ll want to mention when marketing to tenants) will be helpful as you evaluate your property against comparable properties in your area that have rented recently or are available for rent. Understanding which properties are currently for rent (i.e., your competition) is as important as knowing what has recently rented.

How do you find the rent prices of comparable homes? Several online resources can help you find comparable property rental rates. Websites such as Trulia, Zillow and Rentals.com are valuable resources for conducting your research. The old-school, but proven, way to do research is to go out into the field and research the area yourself. The surrounding homes and the area, in general, will impact the rent value of your property.

You can also consider using a local professional property manager. Self-managing your rental property may seem like it will save you money, but it could easily result in unnecessary frustration, wasted time and lost revenue.