You don't buy investment properties for your health. The whole idea is to turn a healthy profit month-over-month and set yourself up for retirement. VerticalRent's Small American Landlord Series is proud to announce it's recent edition, 8 Factors Affecting Rent Prices. This comprehensive guide gives you insider perspective of how to maximize the rent you collect for your investment property.

1. 8 Factors Affecting Rent Prices I
Factors
Affecting Rent
Prices
Your Comprehensive Guide
to Maximizing Profits

2. Copyright © 2016 by VerticalRent
All rights reserved. Published in the United States of
America.
DISCLAIMER
VerticalRent does not take any credit for creating the images found in this book,
these files are acquired from various sources which outwardly claim to be “public
domain,” and as such no copyrighted images are included with the knowledge of the
publisher of this book. The common sense tips in this e-book should not be
construed as legal advice. These are guidelines that will help you as a landlord,
property manager, or tenant screening provider. Local laws and regulations may differ
in your area. Be sure to consult with an attorney before rejecting an applicant and
ensure you are following fair housing laws.

3. Contents
Introduction............................................................................................................................................................2
Research..................................................................................................................2
Methods and Techniques for Researching Fair Market Rents...................................3
What Is Market Rent?...........................................................................................................................................3
Factors Affecting Rental Prices...............................................................................4
What Tenants Are Looking for in Rentals.................................................................6
First Impressions Matter for Rentals, Too...............................................................7
Testing the Market...................................................................................................7
Conclusion...............................................................................................................................................................9

4. 8 Factors Affecting Rent Prices 2
Research
Naturally, as a landlord, you want to make sure you get the most rent possible for
your property. However, it’s important to keep in mind that you must price your
rental appropriately and in line with the local market. Below, we explain how to
research your local market to ensure you get top dollar for your property.
Whether you are just starting out or you are an experienced landlord, it’s important
to research the rental rates in your local market. You should do this regularly to
make certain you are making the most of your rental property income potential.
While it does take time to do this, this one step can help you avoid overcharging,
which could result in vacancies, as well as making sure you do not charge too
little. When done properly, market research can help you reduce vacancies,
attract high-quality tenants, and keep your profits high.
Introduction

5. 8 Factors Affecting Rent Prices 3
Before we get started in reviewing how to perform market research, it’s important
to define market rent. This refers to the going rental rate for properties within a
specific area. As is the case with most things, the rent is based on what the local
market is capable of absorbing. This is precisely why it is so vital that you perform
this type of research. You cannot simply set a rent and expect someone to pay it.
First, consider whether your property is multifamily or single-family, because it does
make a difference in terms of the amount of rent you can charge. Generally
speaking, a multifamily property will command less rent than a single-family
property. The reality is that even a duplex is not going to receive the same rental
rates as a single-family home. Renters prefer the privacy of a single-family property
and will pay more for it.
Methods and Techniques for Researching Fair Market Rents
There are a few different methods that you
can use to research local rental rates. One
option would be to simply drive around the
neighborhood and keep an eye out for
properties that are available for rent and
then call to inquire about the rental price.
Another option is to check the local MLS. To
do this, you will need to look for listings
online, such as on a site like Realtor.com, or
contact a local real estate agent. You could
also look for rental listings on Craigslist and
similar online classified sites.
Contacting local property management companies could also provide you with
information about the going rates for rental properties, as could speaking to
members from the local landlord association, if you have one in your area.
What Is Market Rent?

6. 48 Factors Affecting Rent Prices
You might also find it helpful to use an automated market rent determination tool,
such as Padmapper, Rentometer, or Zillow, but keep in mind that it’s still a good
idea to confirm these estimates by performing some actual research in your area.
The U.S. Department of Housing and Urban Development, or HUD, also compiles a
list of Fair Market Rents each year for more than 2,500 metro and non-metro
counties. These market rent prices are developed for determining the rental voucher
amounts of government subsidized housing programs, including Section 8.
What does this mean for you? As a landlord, you are probably all too well aware that
location is everything when it comes to real estate. If you own rental properties in a
lower-income area, the HUD Fair Market Rent information could prove to be helpful
to you. On the other hand, if your rental property is located in a more affluent part
of town, this information is probably not relevant.
Factors Affecting Rental Prices
In gathering your research, you will likely find there to be a broad range when it
comes to rental prices in your local area. This is likely because not all properties are
the same. Just as single-family properties tend to command higher rental rates than
multifamily properties, there are many other factors that can affect rental rates.
These factors include:
Ø Number of bedrooms
Ø Number of bathrooms
Ø Pets allowed
Ø Square footage
Ø Parking
Ø Washer/dryer
Ø Location
Ø Lawn

7. 58 Factors Affecting Rent Prices
Obviously, properties with more bedrooms and baths, with more space, that allow
pets, that have more parking, and that are located in a highly desirable area will be
able to command a greater rental rate. You should also adjust for any amenities
your property either possesses or lacks from similar listings in your area. For
instance, if your property has upgraded features that other properties do not, you
should add to your rental price. If other similar properties in the area have certain
amenities that your property does not, you will need to lower your rental rate.
Whether you choose to allow pets in your
rental is naturally a personal decision.
You may find you have more rental
prospects if you do allow pets, at least
with some restrictions, such as only
small breeds. On the other hand, many
landlords are naturally wary of doing so
because they fear damage to their
property, and with good reason. If you
do choose to allow pets, even with
restrictions, keep in mind that you can
usually ask a higher rent to compensate for the risk you are incurring. You may also
be able to charge a reasonable pet deposit.
You should also consider your minimum lease requirements because they can
influence your rental rates. For instance, if you offer a shorter lease, you may be
able to command a higher rental rate. Likewise, if tenants are signing for a longer
lease, you may need to adjust your rental rates accordingly. If your rental property
is located in a homeowners’ association, it’s important to check the rules, as some
HOAs will not allow owners to rent their properties on short-term leases.

8. 68 Factors Affecting Rent Prices
Is your unit furnished? A furnished rental is usually
able to command more rent than an unfurnished
rental. Bear in mind that the condition of the
furnishings will likely affect how much more you
are able to command for a furnished unit than for
an unfurnished unit.
What Tenants Are Looking for in Rentals
Just as with homebuyers, prospective tenants are all looking for certain things in a
rental in order to be willing to pay top dollar for a property. Some of the items that
tend to be at the top of the priority list for renters include:
Ø A property that is clean and well maintained. The reality is that renters are not
going to pay top dollar for a property that is not well maintained. Quality renters
are looking for properties where maintenance will not be an issue and if there
are any problems, the landlord will handle them without delay.
Ø Location. A property situated near essential services will always garner higher
rents than a property in an outlying area. Properties located near schools,
shops, leisure facilities, and transportation are most highly valued among renters.
Ø Storage. Most renters today are looking for rental units with ample storage
space. Everyone today seems to have more stuff than ever, and they need a
place to store their belongings without also having to rent a storage unit. If your
property provides extra storage, you will likely be able to ask a higher rent.
Ø Amenities. Appliances, such as garbage disposals, dishwashers,
washers/dryers, etc., are practically considered must-haves in rental units
today. If your property features these items, you will definitely be able to charge
a higher rent.
If your property has these features, you can rest assured it will appeal to a larger
range of tenants who will be willing to pay more to feel comfortable.

9. 78 Factors Affecting Rent Prices
First Impressions Matter for Rentals, Too
You should also keep in mind the importance
a first impression a rental property can make
on a person when walking through the door
to view the property. Updates can be
tremendously helpful for boosting that first
impression, particularly when you are
competing with a large number of other
properties. Before showing a property to
prospective tenants, always make sure the
carpets are clean and the paint is fresh. Many landlords make the mistake of trying
to fill a vacancy so quickly that they do not take the time to freshen it up properly
following the last tenant. In some cases, you may not be able to allow much time
between rentals to fill a vacancy, but taking the time to freshen up a unit and
perform some updates can go a long way toward helping you get the highest rental
price possible. It's also important to take great pictures for marketing purposes so
prospective applicants will be able to see how great the property is before they
physically tour it.
Bear in mind that you will also need to consider whether there are any restrictions
or government controls regarding local rents. In some areas, there is rent control,
which can place an artificial control on the market, so you will need to know if that
is the case when you are evaluating the local market.
Restrictions

10. 88 Factors Affecting Rent Prices
Testing the Market
Once you have decided on a rental price,
it’s a good idea to give it a test run. This
can be particularly important if you have
determined that your rental rate should be
greater than the average market rate for
your area. Offer your property at the test
rate for one to two weeks. Doing so will
give you a good idea as to how prospective
renters feel about your property and the
asking rent. If you have a lot of inquiries,
you will know that your rental rate may be
low. Conversely, if you receive few
responses, you will know that your unit is
priced too high.
Keep in mind that if you do opt to give your rental price a test run that you do so
with caution. This must be handled carefully, or you could find yourself facing
potential legal trouble. Some landlords have been accused of a practice known as
bait and switch by advertising a low price and then charging a higher price. Not only
is this unethical, it is also illegal.
It's also important to pay attention to the number of people who actually follow
through with appointment to tour the property. In some cases, landlords may notice
they have a number of phone calls but prospective renters frequently cancel or
never show up for their appointment to see the property. When this happens, it’s
usually an indication that either your property lacks curb appeal or that competing
properties are priced better.
Suppose you show the property to a larger number of people, but you do not
receive any actual applications. This could be an indication that you need to
evaluate the interior of the property and consider making improvements or lowering
the asking rent.

11. 8 Factors Affecting Rent Prices 9
Ultimately, the amount you charge for rent will be based on what the current market is seeking
at the time that you list your property for rent. By conducting research, you will be able to
establish a fair market rent value for your unit. However, keep in mind that fair market rent
values can and will change over time, so it’s important to stay on top of this to ensure your
property remains competitive.
Conclusion