Pricing a rental property in Roanoke requires a few things.
First, you need to have a good understanding of the local market so you can be sure you’re setting a rental price that makes sense. Next, you need to understand the property you’re providing, and how it compares to other options that tenants have.
Several factors influence what you’ll be able to charge. These include location, property size, condition and amenities, and even the time of year in which you’re listing the home.
Accurate pricing is critical, and so is competitive pricing.
What do we mean by competitive?
We mean that you’re working to accomplish two things with your rental value:
- Earning as much rental income as you can every month.
- Attracting well-qualified tenants in a short amount of time.
Good tenants have a lot of options, even in a market like this one, where high quality housing is in high demand. You want to make sure they choose your home over all the others. To do that, you need to provide value. The right price keeps you competitive and limits your vacancy loss.
As Roanoke property managers, we’ve been strategically pricing rental homes in this market for years. We have access to accurate, up-to-the-minute data, and we establish rental values based on current market performance and the selling points of your home.
We have some ideas on how to price your rental home correctly and competitively.
Take a Look at the Roanoke Rental Market
As we said, it starts with the market. This is the single most important factor in how you price your home. No one is going to rent a home that’s not within the range of other Roanoke rental properties.
Maybe you have a specific amount in mind – a sum you’d like to earn every month to ensure you’re earning the cash flow you want and covering the cost of you mortgage, taxes, insurance, and other expenses. It doesn’t matter. If you’re expecting to earn $1,500 a month but the market won’t let you go higher than $1,200, you’re going to have to make peace with that.
Always follow the market.
Local expertise is important when you’re evaluating the market. If you don’t live here and you’re not in touch with the ups and downs of various price points and tenant trends, you’re going to have a hard time understanding where you should start when it comes to pricing your property.
It’s easy enough to browse the online rental sites like Zillow and Trulia and even Craigslist. You can get an idea of what the rental ranges are for homes like yours. Analyzing that data, however, can be tricky. First of all, you don’t know what those homes are actually renting for. Just because something is listed at one price doesn’t mean it’s going to rent at that price. You don’t necessarily know the nuances either, like whether there are HOA fees included or utilities or landscaping. Maybe you’re looking at an old listing that hasn’t come down yet.
This is an acceptable starting point, but don’t price your home based on what you find online.
Instead, ask a local Roanoke property manager for a comparative market analysis. Many management companies will provide this free of charge, and you can get an idea of what homes similar to yours are renting for in your area.
This can be an invaluable resource, and you’ll have better numbers than you would if you simply started scrolling through online ads.
Factor In Your Rental Property Location
Everyone knows location matters when we’re talking about real estate. It impacts the value of your rental real estate, too.
Here are some of the things that will allow you to ask more in rent when we’re thinking about location:
- A good, well-rated school district
- Easy access to commuter routes and highways
- Proximity to grocery stores, restaurants, entertainment, and recreation
- Walkability (either wide, suburban streets with sidewalks or a location that’s within walking distance of amenities and attractions)
And then there are the things about a property’s location that will lead you to reducing your monthly rent:
- Remote location that’s difficult to find
- Highly commercial or industrial neighborhood
- Lack of infrastructure, such as Wi-Fi, sidewalks, grocery stores
- High crime
There’s not much you can do about your location. Your property is where your property is.
However, this is something you can think about when you’re looking for your next investment. If you’re considering a new rental property, make sure it’s in a desirable location that is likely to increase what you earn in rent every month.
Property Condition Impacts Pricing
You cannot control the market and usually, you cannot control the location. These parts of the pricing process depend on outside forces.
One thing you have complete control over, however, is the condition of your rental property.
Well-maintained homes are always going to bring in more rent than those that are old, deteriorating, and in need of constant repairs. Tenants don’t want to live in a home where the walls are falling down and the appliances are barely working.
Making your property rent-ready means ensuring it’s habitable, safe, and attractive.
To really price your property competitively, make some upgrades and updates that are likely to get the attention of good tenants.
You’ll have to invest a bit of money, but when you choose cost-effective upgrades, you’ll earn back everything you spend by attaching a higher rental price tag to your home.
Here are some of the improvements you can make to your property’s condition that will make it stand out in a crowded rental market:
- Fresh paint
- New floors. Tear up the carpet and consider putting in hard surface flooring, at least in the common areas. You don’t have to splurge on hardwoods. Faux wood, laminate, tile, and even vinyl that’s good quality can look great.
- Better lighting. This applies to interior lights (especially in kitchens and bathrooms) as well as exterior lights.
- New hardware in the kitchens and bathrooms. Install new faucets, drawer pulls, shower curtain rods, and mirrors. You’ll be amazed at how new and modern your home looks
- Pretty landscaping. Keep it low-maintenance, but make it look nice.
Improving your property condition will allow you to charge more in rent and remain competitive in the local rental market. Your home will be what sets the standard for other properties.
Competitive Pricing to Avoid Long Vacancies
Every rental property owner understands that vacancy is a risk and smart investors budget for a certain number of vacant days every year when they rent out a home.
But it’s easy to forget just how expensive vacancy is.
When your home is unoccupied, you’re not earning any rent at all. You’re also paying for things like security, landscaping, utilities, and the minor maintenance issues that pop up when no one is there to address them right away. Turnover costs are even more expensive.
Avoiding vacancy needs to be part of your investment plan.
One way to do that is with an accurate rental price. A lot of owners fail to see how overpricing a property can lead to larger vacancy losses. No one wants to underprice a home. That only leaves money on the table and creates a situation where you’re always trying to catch up with the market rents.
Overpricing can be even worse.
Here’s how to look at it. Let’s say you insist on renting out your home for $1,500, even if the market analysis says you should list it at $1,400. You think that by holding out for that $1,500, you’re going to earn more money because of the higher rent.
But, if it takes even one month longer to rent out your home at that rental price, you’re actually losing money.
Using Your Rental Value to Attract Qualified Roanoke Residents
The right rental value will help you attract better tenants.
Well-qualified renters with good credit, stable income, and a positive rental history won’t pay more than they have to when they’re looking for a home.
Who will you attract with a price that’s higher than market rents?
Unqualified tenants who cannot get approved elsewhere. They’ll be willing to pay your higher rents with the hope that you’ll be desperate enough for a tenant to approve them.
This is a terrible way to start your tenancy. Keep your prices competitive and don’t settle for tenants who will only end up not paying or causing problems.
Seasonal Matters and Roanoke Rental Pricing
It’s hard to believe, but the time of year also impacts price.
Generally speaking, you’ll be able to charge more in the late spring and summer. That’s when tenants are typically looking to move. Your rental price in the winter or over the holidays may not be as high. Tenants don’t want to move in bad weather or in the middle of a school year.
Please contact us at Lawson Realty Group when you’re thinking about pricing your Roanoke rental home. We manage properties in Southwest Virginia throughout the Roanoke Valley, including Salem, Cave Spring, Hollins, Vinton, Glenvar, and Southwest Roanoke County.