Back HomeThe new landlord’s guide to charging rent
Are you currently juggling two homes at the same time, with no immediate plans to sell the other? Consider renting out your property. It’s a good opportunity to generate passive income while waiting for the right time to sell.
But renting out your property is easier said than done. And one of the most important considerations to bear in mind is how much you’re going to charge for rent. Continue reading to learn how to set the right rent price for your property.
Are you ready to become a landlord?
Property management goes hand-in-hand with renting out your home. And being a landlord can be a full-time, hands-on job. You’ll need to find and screen tenants, ensure they’re able to pay their rent on time, and see to their maintenance needs, among other things. Furthermore, it’s your responsibility to make sure your rental property is 100% safe and habitable. (Learn more about landlord-tenant laws in Texas.)
- Make sure you’re prepared to open your rental to tenants. It can be tricky to detach yourself from what used to be your home especially if it holds a lot of sentimental value. Be prepared to depersonalize and make your home ready for its new occupants.
- Be discerning. Don’t say yes to the first person who applies to be your tenant. Screen all of the applicants. Conduct background checks. If you want a steady income stream, your tenant should be responsible and financially stable.
- Plan ahead. Every landlord needs to be prepared especially when it comes to emergencies or major repairs that need urgent attention. It’s best to bear in mind projected expenses such as property taxes, maintenance costs, and homeowner’s insurance.
If you think you won’t make a good landlord, don’t fret. You can turn to professionals to do the managing for you. There are plenty of property management companies in College Station and Bryan, TX to choose from, including Berkshire Hathaway HomeServices (BHHS) Caliber Realty.
Figuring out the right rental price
To make it worth your while, your rental should turn a profit. Here are a few tips to help you figure out how much to charge.
- Determine the home’s current market value. It’s one of the primary benchmarks in setting rent prices. Many landlords base their rent on about 0.8% to 1.1% of their property’s value.
For example, if your home is currently valued at $300,000, you may charge between $2,400 and $3,300. If the property is valued at $100,000 or less, consider charging rent closer to 1% of its value. However, if your home is valued at $350,000 or more, consider charging closer to 0.8% in order to attract more tenants and keep your property relatively affordable.
- Have the home appraised. For a better look at the value of your home, consider working with a home appraiser. They will base their assessment on the condition of your home, the sale prices of similar homes in the area, and your location. Other factors such as the size of the property and how much of an upgrade it’s had might also come into play.
- Check local rent prices. Look at what landlords for similar properties in your area are charging. This helps you set a competitive rent price for your property. A quick search of homes for rent in your neighborhood can give you the numbers you need.
If you’re renting out your home to pay off the mortgage, the rent price should be roughly the same as your monthly mortgage payments.
Unlike other states, Texas doesn’t have rent control laws. You’re free to raise your rent price as you wish. That said, Texas allows cities to control rent prices in the case of housing emergencies or disasters.
Renting out your property responsibly
Being a good landlord is a balancing act. It starts with figuring out the best rental price that works, not just for your tenant, but for you as well. Hopefully, this guide will help jumpstart your plans of renting out your home.
Berkshire Hathaway HomeServices (BHHS) Caliber Realty offers property management and leasing services. Our team can step in and manage your property for you. If you’d like to learn more, get in touch with our team. We’ll fill you in on everything you need to know about property management in Bryan-College Station TX. We can help you prepare as you start your journey as a new landlord.
Call our team today at 979.694.8844 or send us an email at sales(at)bhhscaliber(dotted)com.
