How Much to Charge for Rent: Setting Your Rent Price

Figuring out how much rent to charge can be one of a landlord’s trickiest responsibilities to deal with. Many factors can influence a landlord’s decision about how much to charge for rent, and an unreasonable rent amount can lead to difficulty finding tenants or issues surrounding rent collection each month. 

On the flip side, charging just the right amount of rent that’s fair for your tenants and profitable for you can make your job as a landlord both more lucrative and easier to maintain over time.

Things to Consider When Deciding How Much to Charge for Rent

Let’s take a closer look at some of the most important factors to consider as you’re deciding how much to charge for rent. Keep in mind that the amount you choose may change over time for a variety of reasons.

Market Pricing on Your Property’s Features

If you’re unsure where to start with setting rent, a great place to begin is with a detailed assessment of all of your property’s assets and their current market rate. 

How many bedrooms and bathrooms does your property have? What is the square footage? How old is it? Are there any unique features that give it a higher value than similar properties in the area? 

You can create a rental market analysis or RMA using this information. This analysis will allow you to determine a fair estimate of how much to charge for rent based on properties similar to yours located within the same general area.

Amenities Offered

It’s good to understand the value of your property’s basic features, such as size, age, and the number of bedrooms and bathrooms. However, even rental properties that are technically similar in these simple ways may differ dramatically in the types of amenities they offer to tenants. 

Some of the most obvious amenities to factor into your rent price are access to common spaces, guaranteed parking spaces, and gated protection, which are often included in apartment and condo buildings. 

However, suppose your rental property is a freestanding home — not included in a gated neighborhood or building. In that case, your amenities could include great views, multiple stories instead of just one, and a lot of storage space.

Your Expenses as a Landlord

Owning and overseeing a property is a source of income for landlords, but in order to see that income, they have to put their own time and money into the property to make it livable and desirable for tenants. Some typical landlord expenses include:

As you’re figuring out how much rent to charge, make sure that your expenses are covered. Then, you can add on a few percentage points to make sure that you’re receiving your earned monthly income for your work. Research what percentage of rent landlords are taking as income in your area to determine a fair cut.

Cap Rate

The capitalization rate, or the cap rate, is the expected rate of return on investment that specific properties will produce. 

You’ll have a very sturdy figure once you calculate your property’s cap rate using metrics like property maintenance and management expenses, the original purchase price, and your gross and net income as the owner. Use this number to decide how much to charge for rent and be ready to explain it to potential tenants if need be.

The 1% Rule

The 1% Rule, also sometimes referred to as the 2% Rule, is a general guideline that suggests a rental price of 1-2% of the property’s purchase price. 

Any major repairs or maintenance costs can be deducted and the value of desirable amenities added to the final total, but this provides a base figure to work off when deciding how much rent to charge.

Seasonal Increase of Potential Renters

Did you know that demand for rental properties can increase or decrease depending on the time of year? The seasonal shifts in the rental market should definitely play a role as you determine how much rent to charge. 

You’ll likely have an easier time securing tenants with a higher rent price during the spring and summer — when demand is high — instead of the winter, when moving homes is less convenient.

SIGN-UP FOR PAYRENT

Start collecting rent online in less than 5 minutes.
  • Control when and how renters pay you
  • Automatically remind tenants when rent is due
  • Accept bank transfers and credit cards
GET STARTED FOR FREE

**Blog Article Disclaimer*

This blog article is provided for informational purposes only and does not constitute legal advice. The content is intended to offer general information and should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances.

While we strive to keep the information accurate and up-to-date, laws and regulations are subject to change, and the legal landscape may vary based on jurisdiction. Therefore, we make no representations or warranties regarding the completeness, accuracy, reliability, or suitability of the information contained in this article.

Reading, accessing, or using the information provided in this blog does not create an attorney-client relationship between the reader and the author, and any reliance on the information is at your own risk. If you require legal advice or assistance, it is crucial to consult with a qualified attorney who can consider the specifics of your situation and provide advice accordingly.

The author and the platform disclaim any liability for any loss or damage incurred by individuals or entities as a result of the information presented in this blog. We recommend consulting a legal professional before making decisions or taking action based on the information provided in this article.

This disclaimer is subject to change without notice, and it is the responsibility of the reader to review and understand the disclaimer before relying on the information contained in the blog article.

PayRent is on a mission to build a rent collection app that fosters a positive and productive relationship between renters and landlords. We focus less on transactions and more on the people behind them.

pay

Subscribe to Our
Email Newsletter

Receive timely and relevant articles directly to your email inbox.
SUBSCRIBE
You can unsubscribe anytime.
We respect your privacy
close-link

SIGN-UP FOR PAYRENT

Start collecting rent online in less than 5 minutes.
  • Control when and how renters pay you
  • Automatically remind tenants when rent is due
  • Accept bank transfers and credit cards
GET STARTED FOR FREE
close-link

Discover the Truth About UFOs

Top secret documents reveal ET encounters the government has been hiding
freshmarketer CTA
SUBMIT
close-link

Donate Today

To the Center for Kids Who Can't Read Good
LEARN MORE
close-link

Protect Yourself From Robots

Smart seniors get their robot insurance from Old Glory Insurance
freshsales CTA
SUBMIT
close-link

Interested in PayRent?

Get a custom price quote when you schedule a demo.
*We won't share your information outside of our company
REQUEST A DEMO
close-link

Protect Your Evictions

PayRent gives landlords the control to block
all or partial payments from their renters.
LEARN MORE
close-link

Protect Your Privacy

PayRent allows landlords to accept payments without
ever sharing their personal information with tenants.
LEARN MORE
close-link

Automatic Rent Reporting

PayRent reports rent payments to
all 3 credit bureaus at no extra cost.
SIGN-UP FOR FREE
close-link

Track Renter’s Insurance

Require Insurance and Track Documents with PayRent
LEARN MORE
close-link

Accept Credit Cards

PayRent makes it easy for Landlords to accept
Bank Transfers and Credit Cards.
SIGN-UP FOR FREE
close-link

Save Time With PayRent

Automate invoices, payments, receipts, late charges
and credit reporting with PayRent
LEARN MORE
close-link

Find This Useful?
Share it!

Like and Follow Us on Your Favorite Social Platforms
close-link
0 Shares
Share
Share
Tweet