Choosing the right rental price for your Atlanta rental property can be complicated.
You don’t want to underprice your home, because that will mean less monthly rental income for you. When you start with a price that’s below market, it will attract tenants quickly, but it will also be more difficult to increase rent in the future.
You don’t want to charge too much, either. If you do, you’ll have a hard time renting it quickly to good tenants. A longer vacancy period is a lot more expensive than a lower rental price.
Properly pricing your Atlanta investment home requires a deep knowledge of the local market, and a willingness to be flexible. There are a few things you can do to ensure you’re pricing your home correctly to attract the best tenants to your property.
Atlanta Rental Market and Its Impact on Price
Pricing your home correctly requires you to study the Atlanta market and to know what kind of prices it will tolerate. Perhaps you want to earn $1,500 a month in rent because that amount will cover your mortgage and your taxes and insurance, while still providing some monthly income. But, if homes similar to yours are renting for $1,300 per month, your price will only leave you with an expensive vacancy or an undesirable tenant.
It’s vital to understand what’s happening in Atlanta. Pay attention to market conditions and the rental landscape. When rental property inventory is low and demand for them is high, you have a little flexibility with your pricing, because tenants will be competing for the best homes. But, when there is a lot of competition on the market, and plenty of homes for tenants to choose from, you’re going to need a reasonable price to attract good tenants.
Make it a priority to learn about the market and to stay on top of its changes. If you work with an Atlanta property manager, you’ll have someone watching the trends in the rental market for you. Your property manager rents houses like yours every day. No one is better positioned to price a home correctly.
Understand Size, Condition, and Location when Pricing an Atlanta Rental Home
The performance of the current rental market is beyond your control. But, you can control how your property looks. Increase your rental value, and remember that these are the things that matter most:
- Location is crucial, even with rental real estate. An Atlanta property in a good school district will easily attract higher rents and demand from families with children. If your home is close to public transportation or popular commuter routes, you can charge more than a similar home in a remote area. Spotlight your location in your marketing and advertising, especially if your price is a little higher than similar properties in less appealing neighborhoods.
- Property size also matters to your price point. In Atlanta’s suburban communities, renters will be looking for single family homes with at least three bedrooms and two bathrooms. Those are the homes that can be priced well. In the city, apartments and condos don’t need to be huge, but they do need great amenities and modern updates if they want to bring in top dollar.
- While you cannot do much about your location or your size, you can take complete control of property condition when you’re pricing your home. Make sure your home is in good condition. If you want to attract the highest rents, make some improvements and updates. You don’t have to do a complete renovation or sink thousands of dollars into your property. Simple updates will work. You can change out the hardware on drawers and cupboards. Improving the lighting or the landscaping can also provide major returns for minor costs. To charge the most rent, your property must be clean, functional, and attractive.
- Pricing your home according to season may not make sense, but you need to think about your tenants. Families with children are less likely to move during the school year. No one in Atlanta will be crazy about moving in January or February, either. Vacancies are longer in winter months, typically, and you may be required to drop your price a little. The highest rents can be charged in May or June.
Assess the Competition with an Atlanta Rental Market Analysis
Once you know what your property is worth, get to know the competition. Before you can price your property, you need to know how it stands compared to other properties.
This is where a professional Atlanta property management company can really help. You can usually ask for a free comparable market analysis, which will track what similar homes are renting for in your area. This is extremely beneficial, because it will give you a range that’s acceptable for your property.
You can do your own analysis, but remember that your data will not be as reliable as a property manager’s. Several online rental sites like Zillow, Trulia, and Rentals.com will tell you what properties like yours are listed for. However, you won’t have access to what tenants are actually paying for those homes. Just because a home is listed at $1,400 per month doesn’t mean it actually rented for that much.
Compare other properties to your own. Perhaps you have more square feet and a better location. Those things will allow you to charge a little more. But, if the other properties have stainless steel appliances and two-car garages but you don’t, you’ll have to price your home a little lower.
Evaluate Your Marketing Results and Be Flexible
If you pay attention to how your listing is performing, you will know if your price is too high. You should be getting a lot of attention for your property once you begin your marketing. When your home is on the market and you’re getting regular phone calls and inquiries, and prospective tenants are asking to see the property, you’re probably in a comfortable rental range. But, if no one is calling and no one is applying after seeing the home, you might be pricing it too high.
Find a way to track your results. Property managers have software that does this for you. If you’re doing it alone, gather information on the number of people who are contacting you, how many of those prospects are seeing the home, and whether they’re filling out an application after the showing. This will tell you whether you’re in the right range.
If no one is applying for your home, the price may be the problem. Consider lowering it. It’s essential that you remain flexible. You don’t want to get too emotionally attached to the amount that you charge. Losing an entire month or two of rent is more expensive to you than lowering your price by $50 per month.
Property Management Atlanta: Rental Price and Tenant Quality
Rental price often has a direct impact on the type of tenants you’ll place.
Well-qualified tenants know they will be accepted at any available rental property. Landlords love renting to high quality tenants. So, desirable tenants aren’t going to waste their time with overpriced properties. The tenants who are willing to pay more are those who have been denied by other landlords. They probably have negative credit, low income levels, or damaging landlord references. Accepting a tenant like that is a big risk, even if they are willing to pay a monthly rent that’s higher than the market will support.
When you’re pricing your rental property, think about renting it out quickly to a good tenant. That’s the best way to protect your property and your ROI. The long term effects of your price are more important than your immediate monthly income. You won’t earn any income at all if you have to evict a tenant or wait for someone who is willing to pay your price.
Increasing Rent in Atlanta: Be Smart
Most tenants know that their rent will increase at the point that their lease renews. There are some acceptable reasons to raise
- The lease is renewing;
- The market supports higher rent for properties like yours;
- Your property-related expenses have gone up; and,
- You’re offering additional services, such as landscaping or internet.
Tenant retention is an important part of your investment strategy, and you don’t want to chase away good tenants with extreme price increases. When you want to increase the rent, make sure you can demonstrate to the tenant why it’s appropriate, and make sure it’s not an outrageous increase.
Good tenants who love living in your property will not want to move. But, they will look around and see what other properties are renting for before they sign a renewal. Keep your rental increase reasonable, and let the tenants know that the additional rent is consistent with the market.
Consider adding value when you implement an increase. Perhaps a free carpet cleaning will make your tenants happy, or you could offer to replace an aging appliance. Always give your tenants plenty of notice before you raise the rent, and keep the lines of communication open.
Pricing your Atlanta rental property is an important part of your success as a landlord or investor. If you need help understanding the market or how to use your price to attract the best tenants, contact us at Specialized Property Management. We’d be happy to help with all of your Atlanta property management needs.