As the city has become more desirable in recent years, the number of renters in Houston has skyrocketed. Due to the expansion of the city, the need for rental accommodations is rising.
If you’ve been thinking about renting out your property in Houston, now is the perfect time to do it. The local rental market is healthier than ever, with a high tenant demand and a fair supply of properties.
However, in order to fill your vacancies, you need to ensure your rental is priced appropriately. In this article, the team at Real PM Prestige will share the best strategies for pricing a rental property in Houston. Let’s dive in!
7 Tips to Price Your Houston, TX Home to Rent
1. Assess the Condition of Your Property
The condition of your Houston rental will play a crucial role in its profitability. A well-maintained property can be rented at the same price as other comparable properties in the area. But if your property has been newly renovated or has significant upgrades, you can charge a higher rate for it.
Make sure to address any needed repairs as soon as possible, no matter how small they are. And consider making some renovations. Simple cosmetic upgrades such as a new coat of paint or new light fixtures can significantly enhance the visual appeal of your rental.
If you truly want to make your property stand out, you should consider making bigger renovations, such as renovating the kitchen, installing new flooring, or refreshing the curb appeal. Tenants will be more likely to pay more for your rental if they think the price is worth it.
2. Calculate the Property’s Value
Property values tend to grow over time. It makes sense to want the price of rent to reflect the current value of your investment. By calculating the market value of your property, you can set a competitive rent price for your Houston rental.
You can calculate your property’s value by comparing recent sales of similar properties, analyzing current rental rates in the area, and using online property valuation tools. Once you’ve calculated the current value of your property, a good rule of thumb is to charge 1.1% of that figure for rent.
3. Research Comparable Properties in Your Area
When pricing a rental property, it’s important to keep in mind the state of the local real estate market. While Houston is a highly desirable city, not all neighborhoods are as profitable. To set a competitive rent price, you can research comparable units in your area.
Make sure to pay close attention to properties that have recently been rented and those that are still on the market, as this can give you an idea of what price ranges are more successful with renters.
4. Evaluate Vacancy Rates
When evaluating the current market trends, you must pay close attention to the vacancy rates in your area. If there’s a high tenant demand but only a limited supply of properties in the neighborhood, you may be able to charge a higher price of rent.
On the other hand, many vacancies are a sign that there’s an oversupply of rental units and not enough tenants in the area. If this is your current situation, you can try charging a lower rent to attract tenants and avoid long periods of vacancy.
5. Calculate Your Operating Expenses
Successfully managing a rental property does not only require a lot of time and dedication but also money.
There are many expenses associated with owning a rental property, including cleaning supplies, property taxes, contractor invoices, management fees, marketing costs, and, sometimes, mortgage payments.
If your rent price is lower than your operating expenses, you’ll end up with a negative bottom line. Before listing your Houston home for rent, you should take the time to calculate your operational expenses.
Make a list of all the costs associated with maintaining the property. This includes utilities, property management fees, maintenance and repairs, insurance, property taxes, and any applicable HOA fees.
By taking into consideration your expenses, you can ensure that your rent price is enough to cover them, ensuring the long-term profitability of your investment!
6. Adjust As Needed
Once you’ve set what you consider to be a competitive rent price, it’s time to list your property for rent. This will be the perfect time to determine whether your rental rates are fair and competitive.
If you have an attractive listing but are not receiving many inquiries or applications, chances are that the high rent price is driving prospective tenants away. If this is the case, you may have to start all over again to ensure your rental rates are in accordance with the current market trends.
Pricing a rental property is not as straightforward as it may seem at first glance. So, don’t feel discouraged if you have to adjust your pricing strategy a couple of times. By being open to making adjustments, you’ll be able to set an optimal price of rent and attract tenants more easily!
7. Partner With a Property Manager
Setting fair and competitive rental rates will help you fill your vacancies more quickly and retain tenants for the long term. If you’re unsure whether you’ve priced your Houston rental appropriately, you should contact a local property manager.
A seasoned expert can help you conduct any needed market research to ensure that your rent price will thrive in the local rental market.
Bottom Line
Pricing your Houston rental property is a crucial step in the leasing process. Overpricing your rental can drive potential tenants away. On the other hand, underpricing can leave you in a financial crunch.
By assessing the condition of your property, calculating the unit’s current market value, researching comparable properties in the area, and calculating your operational expenses, you can set a competitive but fair rent price that will attract tenants without compromising the profitability of your investment.
If you need further help pricing your Houston rental, contact Real PM Prestige!
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