The median rent crossed over $2,000 in the United States in 2022.
Inflation causes everything around the world to increase in price. While many people may not realize it, inflation can also impact rental prices. This is because mortgage rates rise, and property investors need to make more to cover their costs.
However, have you ever wondered how a rental property is priced? It’s important to price your property accurately so that you can secure a long-term tenant. If your apartment or home is overpriced, it may remain vacant for a seriously long time, making you less money.
Interested in learning more about accurately pricing your rental property? Read on for more information on the property market and how to price your apartment.
Factors That Influence Rental Prices
It’s no secret that a rental apartment in New York City is not going to be the same price as the same apartment in Houston, Texas. This is because these two cities are completely unique and represent entirely different property markets. Here’s a quick look at the factors that influence local property markets.
1. Neighborhood
The single-most influential factor in determining your rental price is the price set next door. This is because the neighborhood dictates the rental price. In simple terms, if there are 10 apartments on the same street, it’s normal to expect that they are all the same prices.
2. Property Value
The value of your property dictates how much you can charge for rent. This is because bigger, more expensive properties offer more than smaller apartments. This way, you have to pay for more if you want to get more.
3. Added Amenities
Not all rental properties are the same. While some are standalone homes, others are townhouses or luxury apartments. Townhouses, gated estates, and luxury apartments tend to come with added amenities. This can include private pools, a gym, or even a café.
These added amenities can help influence the rental price. This is why investing in apartments like this tends to also be more expensive.
Increasing Rent Prices
When you own a rental property, rental increases are completely normal. While we may not like it, inflation gradually rises the cost of living for everyone. This means that you need to increase your rental income every year.
The average rental property tends to increase rental prices by around 3% to 5% per year. This can differ depending on the economy but is usually kept at these rates to beat inflation.
List Your Property Accurately
If you have a rental property, it’s incredibly important that you list the property accurately. Setting the price too low or too high can result in you making less money off your investment, so it’s important to keep things accurate.
The property size, value, and neighborhood all play a role in determining this price. However, working with a property management company can help guide you in the right direction. This is because they have the experience and the data to help accurately price your property.
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