This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and homeowner associations. Please submit any questions in the comments section or via email.
One of the biggest questions any landlord faces is how much to rent a property for. Even if you’ve been renting property for years, every time a unit becomes vacant you’ll be faced with the same question. This is especially tricky if you’ve had a long-term tenant and would like to find someone who’s willing to stay for several years.
The Problem With Craigslist
Many landlords start by going to Craigslist to check out similar properties and get an idea of what they can charge. While this seems like a logical place to start, there are two distinct problems inherent with this method.
Craigslist Is Full of Scams
The average rental price is heavily skewed because of the amount of fraudulent rental listings. It’s a common practice for scammers to scrape information from other websites listing houses for sale and repost them on Craigslist as rentals at ridiculously low prices.
This hurts everyone. Landlords using this method to determine their prices may seriously undervalue their rates because of what they find.
Rents Are No Indication of What People Are Actually Paying
Just because someone is asking $2,500 a month for their newly renovated Ballston condo doesn’t mean they’re actually getting that much. Landlords often base their rates on what they need to get instead of what the going market rates are.
Why Zillow Is a No-Go
Another popular method for landlords is to use the Rent Zestimate feature on Zillow. These estimates use a proprietary method for determining fair market rents based on public data, amenities and neighborhood. They provide both a low and high rent amount based on what they find.
The problem with Zillow is that it has no human going behind it and checking the data. You could have the worst house in a nice neighborhood and the rent prices would show as much higher. It’s also rife with scams, which can skew rent prices even further.
It’s common knowledge that Zillow prices are not accurate. It would be surprising that their rental rates would be any different.
What Should I Do Instead?
You may be feeling confused about how to accurately price your rental. But there are legitimate ways to come up with an accurate rate. SmartAsset recommends charging between 0.8 to 1.1 percent of your home’s value.
If your unit is worth less than $100,000 (highly unlikely in Arlington), charge on the high end. But if it’s worth $350,000 or more, charge on the low end to attract more tenants.
Here are a couple of resources to help you research the Arlington rental market.
RentJungle
Keep in mind RentJungle focuses on apartments, which generally have more amenities than single-family homes. But you’ll get a good baseline for how much people are paying, and if you have a condo with good amenities, prices are comparable.
Neighborhood Scout
In addition to rental data, Neighborhood Scout gives a complete picture of the area, including how old most homes are and the average selling price. This gives a better indication of how your rental property stacks up against others.
Contact a Property Management Company
Many landlords are skeptical about paying someone to manage their rental, but property managers have a vast network of resources and neighborhood knowledge that save you money in the long run. In addition to helping you determine the right price for your rental, they can manage the screening process and make sure your property is maintained to meet all local regulations.
Don’t Skimp on This Important Step
Pricing your property appropriately is one of the most important things you can do to attract long-term tenants that will not only pay the bill, but take care of the place as well. Take your time and do your homework to insure you’re charging appropriately. Your bottom line depends on it.