As an investor with multiple properties under your belt, you're well-acquainted by now with the long-term wealth and incomerental properties provide. However, when you don't charge what your property is worth, you're losing out on the income you deserve! What do we mean by this? It all boils down to the tools you use to price your properties.
Speaking of which, how do you price your properties? If you've been picking your rent rates based on a feeling or the suggestion of other investors, you may have been missing out on your property's true value this entire time!
At Renters Warehouse DC/NOVA, we always price the rental properties we work with using real market values and in-depth research. As a professional property management company in Washington DC, this helps us find the bullseye price specific to units in our area—rather than other cities. Different cities face differing market pressures—and this affects their rental rate accordingly.
To get an idea of what we mean, consider the following example:
You price your rental according to what your investing contacts in Alabama are charging for an average unit in Florence. The average rental rate for a one-bedroom unit in this area is a mere $401 as of 2019. Compare that to the rates in Washington DC, and you'll quickly see why that's a problem: the average one-bedroom unit in our area goes for $2,235. Yikes!
While this is an extreme example with a potential loss in income of $1,834, this is precisely why we use cutting-edge and only cutting-edge market research to find the bullseye price for the units we manage. As an investor with multiple properties, you can't afford to be losing out on this kind of income if you want to continue to grow!
The Washington DC rental market is hot for investors: currently, renters outnumber homeowners—and that number is only expected to rise. If you're interested in the metrics you should be targeting when you price your rentals, keep reading to glean some insight into the figures that a professional property management company in Washington DC uses to find that bullseye price.
What Features Matter When Setting Your Bullseye Price?
The first thing anyone pricing a portfolio needs to understand is the market that surrounds their properties. Like our example above, the demand in your market is a key indicator of what you might be able to charge for your properties.
Get to Know the Washington DC Rental Market
When investigating the local market, here are some factors to consider:
- Are other rental units nearby vacant or occupied?
- What's the total volume of rental homes in the area?
- What's the distribution of single-family to multi-family properties?
When we say local, we mean local: it's best to do this type of research at the neighborhood level. The reason for this is because average rates and occupancies fluctuate wildly across our nation's capital.
For example, a unit in Benning only runs about $1,186, whereas nearby Navy Yard rentals run for more than double that rate at $2,737. Rental property in Benning can still net you more than its humble comparison in Florence, AL, but basing your research on the community is the first step to finding your bullseye price.
Investigate Comparable Properties
This is where things really get interesting: it's time to do some snooping on the competition! Researching what comparable properties near yours are charging is the rental equivalent of two gas stations near each other adjusting their prices to compete for business. We've all seen this principle in action—and it affects your rental properties, too.
Here's what Washington DC property managers look at when investigating "comps" near a rental:
- Any fees being charged by the landlord
- Their vacancy rates
- Square footage
- The number of bedrooms and bathrooms
- Any offered amenities.
Features like bedroom count, amenities, and square footage should all be kept as close to your units as possible to ensure you're getting a clear picture of the market. Otherwise, you won't get an accurate assessment of what your competition is charging.
Explore Extras That Matter
The phrase "Location, location, location" exists for a reason! We've touched on how location matters with respect to pricing relative to your neighborhood, but there are some additional features that can affect your bullseye price which can easily slip by. We're referring to desirable extras that renters are looking for in a neighborhood worth settling in.
- Are any of your properties near excellent area schools?
- Can potential tenants walk to shopping, restaurants, or other points of interest?
- Are your rental properties near a major road or highway?
The proximity of your units to exciting features like these can also determine your bullseye price and are worth investigating.
It's a Lot of Work to Find Your Bullseye Price—But It's Worth It
As a professional property management company in Washington DC, we know that investors with multiple properties have a lot more to worry about than merely pricing their rentals. Tenants are the lifeblood of investment property—but if your tenants aren't paying what your property is worth, you're not receiving the income you deserve from the investment you've made.
Our commitment to the power of Rent Estate™ in growing your long-term wealth is exactly why we offer investors access to the robust market research we described above. The best part? You get access to the cutting-edge tools that the pros use—absolutely free.
Save yourself the time and legwork of having to produce a custom analysis of each of your rental properties: take advantage of our resources! Renters Warehouse DC/NOVA is proud to provide a free Rental Price Analysis to investors in need. There's no reason to settle for less than what you deserve!