The prospect of renting their Charleston rental property is an extremely exciting one for landlords. But when we ask them for their expected monthly rent, they are often at a loss for words. It is quite a big responsibility, after all. Setting the right rent price helps you attract and retain potential tenants, and run a profitable rental business. So, here are a few tips that can help you determine the best rent price for your Charleston property.
1. Do Your Research of The Charleston Rental Market
Market research helps you understand the local competition and know whether rental prices are increasing or decreasing in your area. According to latest reports, the rent for Charleston properties has increased by 8% and the average rent for a single-bedroom apartment is $1,625. However, the rates may fluctuate over time. You should regularly check the market rental prices in your neighborhood and decide a competitive rent for your property as well.
2. Assess The Condition Of Your Charleston Rental Property
You can’t change the rental price trends in your neighborhood but you can control how worthy your property appears to the tenants. Tenants tend to select a home that meets their requirements and are ready to pay more for the comfort and convenience it offers. You can justify high rent for your home if you provide extra amenities like appliances or laundry rooms. You should also consider renovating the property if it is too old.
3. Apply the 1% Rule For Determining a Profitable Monthly Rent
The 1% rule is a popular method followed by investors to determine a value for the monthly rent that will turn a profit. It means charging between 0.8% to 1.1% of the total purchase value of your property. For instance, if the purchase price of your rental is $100,000, you should charge a minimum monthly rent of $1,000 to earn a profit on your investment.
4. Study the Demographics Of Charleston
Charleston is the fastest-growing city in South Carolina. With a growing population of 150,227, the demand for rental properties has also increased immensely. Economic growth, the scope for tourism, and technological advancements are opening up several job opportunities and income sources. This has resulted in an increase in rental prices by 8% over the year. Considering all these aspects, you can consider charging higher rent from your tenants.
5. Take Additional Expenses Into Account
Additional expenses are inevitable when you rent a property. You need to spend money on the maintenance, insurance policies, taxes, mortgage, utilities, and legal procedures if any. In addition, you also need to conduct regular system checks such as HVAC, air filters, and a water heater with the help of a professional technician, which can cost money. Therefore, charge a rent that will let you make a profit even after spending on the expense discussed above.
6. Measure The Cost Of Vacancy
Landlords often overlook the cost of vacancy while determining the prices for their rental units. In a dire situation, it is okay to lower the rent by 25% to 50% to save yourself from a long vacancy. Even if your property is not in a good location, you may attract tenants by pricing it reasonably. You may not make more profit from renting at a lower cost, but you may be able to at least cover rental expenses from your monthly income and break even till such a time as when you can increase the rent.
All the above factors can help you determine the right rent for your property. The biggest mistake that rookie landlords make is that they do not analyze the rent potential of a property before buying it and then end up charging outrageous rent to cover their management costs. Avoid this pitfall by hiring an experienced Charleston property management company like Meridian Residential Group.
We are a reputed property management company in the North Charleston, SC area, serving Summerville, Goose Creek, and Moncks Corner, among other cities. We offer all property management services for single-family and multi-family homes in Charleston.
For more information, connect with us at Meridian Residential Group.