As a landlord with an Orlando property, you must have a business-like mindset. If you don’t, you could be losing a lot of money on your real estate investment. Having this analytical and profit-driven mindset is essential when determining the rental price of your property.
You may feel inclined to simply use an online rent calculator such as Zillow to figure out the rental price. We urge you to think twice!
These rental calculators often spit out prices that are way too high or sometimes way too low. They do not take major factors into account, such as certain amenities, the time of year, and your expenses.
So, it’s best to determine your rental price for yourself. But where do you start?
You can start right here!
In this article, we’ll tell you step-by-step how to determine the rental price for your property in Orlando.
Finding Your Base Rent
To start your journey of finding the right price for your Orlando rental, we must start with a base price. Keep in mind that this price is not how much you will list your property. Instead, this gives you a starting point to adjust it later on.
There are two ways to figure out the base price of your rental in Orlando.
- The 2% Rule
- Comparative Market Analysis
We’re going to go into both of these methods in-depth.
The 2% Rule
Long ago, before the housing market became extremely volatile and home values didn’t skyrocket, many landlords used what they call the 2% rule to determine the rental price. This method takes 1% to 2% of the value of the property and sets it as the rental price.
However, since home values are increasing, this would mean the rental price could be too high for the current rental market. While it doesn’t work for everyone, you can calculate it just to give you an idea of what your rent could be.
Comparative Market Analysis
Let’s put on your analytical hat and compare your property to other rental properties in the Orlando market. You’ll use local rental listings and see how much they are charging for rent. However, these properties must be comparable to yours.
What features should they have in common to be considered a comparable property?
- Number of bedrooms
- Number of bathrooms
- Square footage
- Property type
- State of the home
Once you find properties with similar features, you can consider their rental prices. Keep in mind that the average Orlando rent in April 2021 was $1,446.
Sometimes you won’t always find properties exactly like yours, which is when you will have to adjust the price accordingly. In the next section, we’ll explore what factors allow you to increase your rental price.
Adjusting the Rental Price
So, you’ve determined your Orlando property’s base rent from comparing properties and maybe using the 2% rule. Now it’s time to adjust the price accordingly with the features and factors of your property.
Three major factors can adjust the price, which include amenities, season, and the lease term.
Amenities That Increase Rent
It’s no secret that renters are willing to pay more for modern and sometimes luxurious amenities. This means if your property boasts amenities that make for a more comfortable living experience, you can increase the rent.
Some of these amenities include:
- Pool or hot tub
- Washer and dryer
- Private parking
- Modern appliances
- Updated bathrooms
- Extra storage space
- Balcony or patio
- High-end security features
- Completely or partially furnished
All of these amenities offer renters convenience and comfort so that you can increase your rental price with each of the features.
If you’re a first-time landlord, you may not be aware of the leasing seasons. Usually, more renters are looking for a home in the spring and summer months. Therefore, you can charge more for your Orlando rental property due to the law of supply and demand.
However, if you’re renting your property in the fall or winter months, there are fewer renters in the market. So, you may have to decrease the rental price a bit because there are more homes for rent and fewer renters looking.
Lease Term Length
The term of your lease can also affect the rental price of your property. For example, if you offer a one-year lease, the rent can be slightly higher because there is no guarantee the tenant will renew for another year. This means you’ll risk having a vacancy and must find another tenant.
However, if you offer a two or three-year lease, the rent should be slightly lower because you know you will have a long-term tenant. Sometimes taking a rental price decrease for long-term tenants is more profitable than finding a new tenant year after year.
Calculate Your Expenses
Remember how we mentioned you should have a business mindset when leasing your rental property in Orlando? Here’s where some accounting work comes in.
Once you’ve determined the rental price from the base price and adjusted it for your amenities and such, calculate your expenses each month. These expenses often include the mortgage, insurance, utilities, property taxes, and maintenance fees.
You should also consider how much you spend on advertising your Orlando property, as it can cost a few hundred or even upwards of a thousand dollars to acquire a new tenant.
Subtract your annual expenses from the annual rent. This will give you how much you’ll make in profit each year.
If you get a negative number, it means you’re losing money on your investment. You can either raise the rental price, if it makes sense, or try to cut down on your expenses.
Get a Professional Opinion from TrustHome Properties
One of the best ways to determine your rental price for your Orlando property is by asking a trusted real estate professional for their opinion.
Our team at TrustHome Properties has years of valuable experience and can help you set the right rental price for your property. Plus, we can go the extra mile and fully manage your rental property, so you don’t have to spend another minute working for your passive income!
With our 12-month tenant guarantee, you can rest assured you’re maximizing your property’s income and that it’s in great hands.
Contact us to discuss what the rental price should be for your Orlando property today!