Choosing the right rental price for your San Antonio rental property doesn’t have to be complicated.
It’s important not to underprice your home, because that will mean you earn less rental income every month. When you start with a price that’s below market, you’ll attract tenants, but it will also be more difficult to increase your rent in the future.
You don’t want to overprice the property, either. If you do, you’ll have a hard time renting it quickly to good tenants. A longer vacancy period is a lot more expensive than a lower rental price.
Properly pricing your San Antonio investment home requires a good understanding of the local market, and a willingness to be flexible when necessary.
There are a few things you can do to ensure you’re pricing your home correctly.
Know the San Antonio Rental Market
Pricing your home correctly requires you to study the market and to know what kind of prices San Antonio tenants will be willing to pay. It’s possible that you want to earn $1,500 a month in rent because that’s the amount will cover your mortgage and your taxes and insurance, while still providing some monthly cash flow. But, if homes similar to yours are only renting for $1,300 per month, your price will only leave you with an expensive vacancy or an undesirable tenant.
Pay attention to market conditions and the local rental landscape. When rental property inventory is low, and demand for good homes is high, you can price your home on the higher end, because tenants will be competing for the best homes. But when there is a lot of competition in the market, and there are plenty of homes for tenants to choose from, you will need a reasonable price to attract the best tenants.
Educate yourself on the market, and stay on top of the latest changes. If you work with a San Antonio property manager, you’ll have someone watching the trends in the rental market for you. Your property manager rents houses like yours every day. No one is better positioned to price a home correctly.
Property Pricing: Size, Condition, and Location
Rental market performance is beyond your control. But, you can control how your property looks. When you want to increase your rental value, remember that these things matter most:
- Location is crucial, even with rentals. A property in a good school district will easily attract higher rents and more demand from families with children. If your home is close to public transportation or popular commuter routes, you can charge more than a home that’s located in a remote area. Highlight your location in your marketing and advertising, especially if your price is a little higher than similar properties in less appealing neighborhoods.
- Property size is also important. In the suburbs of San Antonio, renters are looking for single family homes with at least three bedrooms and two bathrooms. Those homes can be priced the highest. Amenities and updates will help you earn more, too.
- While you cannot do much about your property location or your property size, you can take complete control of property condition when it comes to pricing. Make sure your home is in good condition if you want to attract the highest rents. Be willing to invest in some improvements and updates. You don’t have to do a complete renovation or sink thousands of dollars into the home. Simple updates will work. Change out the hardware on drawers and cupboards. Improve the lighting or the landscaping. To earn the most rent, your property must be clean, functional, and attractive.
- Pricing your home according to season may not make sense, but think about your tenants. Families are less likely to move during the school year. Vacancies tend to last longer in the winter months, and you may be required to drop your price a little if you find yourself looking for tenants in the winter. The highest rents can be charged in May or June.
Assess the Competition with a Rental Market Analysis
Once you know what your property is worth, you have to measure it against the competition. This will help you to price it accurately.
This is the most important reason to work with a professional San Antonio property management company. You can usually ask for a free comparable market analysis, which will assess and evaluate what similar homes are renting for in your neighborhood. This is extremely beneficial, because it will give you a range that’s acceptable for your property.
You can do your own rental analysis, but your data will likely not be as reliable as a property manager’s data. Several online rental sites like Zillow, Trulia, and Rentals.com will tell you what properties like yours are listed for. However, you won’t have access to what tenants are actually paying for those homes. Just because a home is listed at $1,400 per month doesn’t mean it actually rented for that much.
Compare those similar local properties to your own. Perhaps you have more square feet and a better location. Those things will allow you to charge a little more. But, if the other properties have stainless steel appliances and two-car garages and your property doesn’t have those upgrades, you’ll have to price your home a little lower.
Evaluate Your Marketing Results and Make Adjustments
If you pay attention to how your listing is performing, you will know if your price is too high. Your property, when it’s in great condition, should get a lot of attention as soon as you begin your marketing and advertising. When your home is available and you’re getting regular phone calls and inquiries, and prospective tenants are asking to see the property, you’re probably in a comfortable rental range. But, if no one is calling and no one is applying after seeing the home, you might be pricing it too high.
Find a way to track your results, and follow them carefully. Property managers have software that does this for you. If you’re doing it alone, gather information on the number of people who are contacting you, how many of those prospects are seeing the home, and whether they’re filling out an application after the showing. This will tell you whether you’re in the right range.
If no one is applying for your home, the price may be the problem, and you’ll have to consider lowering it. It’s essential that you remain flexible if you want to rent your property to a good tenant. You don’t want to get too emotionally attached to the amount that you charge. Losing an entire month or two of rent is more expensive to you than lowering your price by $50 per month.
Property Management in San Antonio: Rental Price and Tenant Quality
Rental price absolutely has an impact on the type of tenants you’ll place.
Well-qualified tenants know they will be accepted at nearly any rental property for which they apply. So, desirable tenants aren’t going to waste their time viewing overpriced properties. The tenants who are willing to pay more are those who have been denied by other landlords. They probably have negative credit, low income levels, or damaging landlord references. Accepting a tenant without a good background is a big risk, even if that tenant is willing to pay a monthly rent that’s higher than the market.
When you’re pricing your rental property, think about what you have to do to rent it quickly to a good tenant. That’s the best way to protect your property and your ROI. The long term effects of your price are more important than your immediate monthly income. You won’t earn any income at all if you have to evict a tenant or wait for someone who is willing to pay your price.
Increasing Rent in San Antonio
Tenants expect that their rent will increase at some point. There are several acceptable reasons to raise the rent:
- The lease is renewing;
- The market supports higher rent for properties like yours;
- Your property-related expenses have gone up; and,
- You’re offering additional services, such as landscaping or internet.
For Tenant retention must be an important part of your investment strategy, and you don’t want to chase away good tenants with extreme price increases. When you are ready to increase the rent, make sure you can demonstrate to the tenant why it’s appropriate, and don’t make an outrageous increase.
Good tenants who love living in your property will not want to move. But, they will look around and see what other properties are renting for before they sign a lease renewal. Keep your rental increase reasonable, and let the tenants know that the additional rent is consistent with the market.
You should also think about adding value when you implement a rental increase. Perhaps a free carpet cleaning will make your tenants happy, or you could offer to replace an older appliance. Always give your tenants plenty of notice before you raise the rent, and keep the lines of communication open.
Pricing your San Antonio rental property is an important part of your success as a landlord or investor. If you need help understanding the market or how to use your price to attract the best tenants, contact us at Specialized Property Management. We’d be happy to help with all of your San Antonio property management needs.