How to Calculate How Much Rent to Charge for Your Sacramento Investment Property

When you’re ready to price your Sacramento rental property, you need to take the pulse of the local rental market. While every investment property owner has an idea about what they’d like to earn in rent every month, the market will ultimately drive your property’s price and rental value. 

Some of the most important things to consider when you’re pricing your investment property are:

• Comparable prices for homes similar to yours.
• Property condition and upgrades
• Location of the rental home
• Time of year

Establishing the right price is always a balancing act. You want a competitive price that will attract the best residents, but you don’t want to price your home too low and risk losing income. Reliable data about the market, competing properties, and length of vacancies can help, so work with a Sacramento property management company when you can.

Conduct a Comparable Rental Analysis

Before you price your own rental property, you need to know what similar properties are renting for in your area. You’ll need to do a comprehensive and detailed comparable market analysis, which you can do on your own with the data you have access to or with the help of a Sacramento property management company. 

If you’re gathering research on your own, you can find some information on sites like Zillow and Trulia, but remember that there’s a big difference in what a property is listed for and what it actually rents for. If you notice that homes like yours are listed for $3,000 per month, that’s great. But, if they’re on the market for three or four months before they’re rented, the price may be too high.

Sacramento Rental Property Location

Everyone knows that location is an important factor in real estate. It affects your sales price and also your rental price.

You’ll be able to charge higher rents when your property is located in an area with good schools, easy commuter routes, and within proximity to shopping, grocery stores, and other types of retailers and recreation. These factors stack up well compared to rental homes that are in more remote locations or in neighborhoods that most residents work hard to avoid. 

When you’re comparing your home to the competition in order to price it accurately, make sure you’re looking at homes in the same neighborhood as your own. Rental prices can change from neighborhood to neighborhood and even from street to street.

Property Condition and Upgrades

There’s not much you can do about the Sacramento rental market or your property’s location and size. 

However, you can control its condition. Well-maintained properties will earn more rent than those that are old, worn, and falling apart. Make sure your home shows well and looks modern and inviting when you’re renting it out. You’ll earn higher rents and attract better residents.

Consider making a few small and inexpensive upgrades. Fresh paint, new floors, and minor improvements can help you earn more in rent. For example, if you put in ceiling fans or energy efficient appliances, you’ll be able to ask for more rent every month, and your residents will appreciate the lower energy bills. New hardware on the cabinets and drawers can make your kitchen look brand new. Upgrade the lighting and the window blinds. 

These small things won’t cost you a lot, but they’ll help you earn more money every month. 

Time of Year Impacts Rental Values

A lot of rental property owners fail to consider the time of year when they’re renting out their home, and both your price and your vacancy days will be influenced by whether it’s early summer or the middle of winter. 

Most tenants decide to move during the spring and summer months. Therefore, you’re going to have a larger pool of people looking for a new home. This allows you to charge a little more in May and June than you might charge in December. Very few people are willing to move during the holidays or in the middle of the school year. 

These are just a few of the factors that influence how you price your home. If you’d like to talk about your specific investment property, contact us at Sacramento Delta Property Management.