One of the first questions that many investors in Austin ask is how much they can earn on their rental property. This is a good and important question. We always recommend that you get the answer to this question before you invest in a rental property. You need to know how much income you can expect to earn, and you’ll need to know how much vacancy and turnover you’ll need to factor in before you decide whether an investment makes sense.
Whether you’re thinking about buying a home or trying to attach a rental value to a home that you’re currently renting out, we have some things for you to think about. Remember that the market drives your price. It doesn’t matter what you think the property is worth or what you need to earn to cover your mortgage and expenses.
Conduct a Comparative Rental Analysis
To determine how much your Austin rental property is worth, you’ll need to consider some main comparison points. Take a look at other properties in your neighborhood that are similar to yours. Only use properties that are similar in size, condition, and amenities. Look at homes within your specific zip code or neighborhood. Properties have different rental ranges in different areas of Austin. Use your own neighborhood or you won’t get accurate comparisons.
Check out what your competition is charging, and make sure you’re setting your price at or below what the range seems to be. Overpricing your home is never a good idea. It leads to longer vacancy periods.
Evaluating the Austin Rental Market
Before you price your rental property, you need to know how strong the rental market is. You’ll need to figure out if there’s a lot of competition for rental properties like yours or if the market is flooded with inventory and therefore competitive for owners who are seeking good tenants. You’ll need to consider the time of year and whether a lot of tenants are looking for homes, and you’ll have to factor in the overall strength of the tenant pool.
Market conditions are the single largest factor in determining how much you can charge for rent. You might have heard that someone rented out a property like yours for $1,500 last year. But, things change from year to year and season to season and even month to month. That same home may only be worth $1,200 now.
Property Location, Size, and Condition
Location drives real estate prices, whether it’s a rental home or a home on the sales market. Properties in good neighborhoods simply rent for more than properties in less desirable areas. If you are close to good schools and commuter routes and all the necessary shopping and conveniences, you can ask more. Properties that are far-flung won’t rent for as much.
The size and condition of your home will also impact the price. Well-maintained homes with lots of curb appeal and modern updates will rent for more than older properties that are worn down. Make a few inexpensive upgrades to your property to help it rent for more. Simple things like a fresh coat of paint, colorful flowers, or shiny new hardware on drawers and cabinets can make a big difference.
If you’d like some help pricing your rental home in Austin, please contact us at AustinVestors. We are experts in the local Austin property management industry, and we can help you get as much as possible in rent with your investment.