If you?re a landlord and want to set a price for a rental unit or to adjust the current price you can?t simply pick a number out of the air. Well, you can but it?s doubtful that you?ll get renters at that price or that you?ll make ends meet. It?s a little more complicated than that and requires a little work.
The first thing you should do is determine your expenses. Is there a mortgage? Are there additional fees related to maintenance or other items that you pay regularly. Figure out any depreciation and appreciation. Remember to add in your regular upkeep fees. This gives you an idea of what you need to survive and what would give you a nice profit. But this is not necessarily what you?ll be able to get from the market.
The next step is to review your local rental market and see what people are paying for similar properties. This is really the best indicator of what you can charge for your rental units. By pricing yourself too high for your local market you may risk having too many open units. By pricing your units too low you may not break even and you risk getting undesirable tenants.
If you find that you need much more than your local market accepts then you?re probably not going to be financially successful and it may be time to consider a different line of business or make some drastic changes to your business model.