A recent MTSU report indicates yet another decline of 0.06% in rental vacancy rates for Tennessee during the third quarter of 2022.
So, as the US housing market continues to cool amid higher interest rates, homeowners might find themselves contemplating the rewards of renting vs selling an unoccupied Chattanooga property.
Have you decided that you'd rather earn an income from your home than take your chances in the real estate market? Setting up a fair rental price is the first step to success.
If you set it too high, you won't attract any tenants. Should you go too low, you'll lose out financially.
Here's how to get the balance right for your Chattanooga rental property.
Consider the Rental Price Rule
One way to come up with a rental rate for your home is by using the 1% rule. This means you should charge between 0.8% and 1.1% of your property's market value.
The minimum range would apply to cheaper homes worth around $100,000 while you could charge the maximum for properties valued at $350,000 or more.
You can use this as a ballpark figure when calculating your rental pricing, but there are a few other factors to consider, too.
Use Neighborhood Comps
Despite low vacancy rates, it's still important to be competitive in the local market. One way to make sure you're not over or undercharging is by comparing rental prices for comparable houses in your area.
You'll need to search local rental listings to find out what your competition is charging, ask people you know who are renting in the area or consult local notice boards for advertised rentals.
You must take the average income level of your target market into account. If they can't afford to pay your rent, they'll go elsewhere.
Alternatively, speak to a real estate agent about doing these comps for you or complete a free online rental analysis.
Factor in Your Home's Unique Features
There's a slim chance your home is exactly like any of the homes you come across during your rental comparison exercise. You can charge a little more if your home has the following features:
- Secure parking
- Landscaping and outdoor entertainment areas
- High-end appliances and fixtures
- Extra storage
- An ADU
If you're renting your home furnished or you allow pets, you can charge a little extra.
You must take all the expenses related to your property into account when setting a rental price. Ideally, the rent should cover your monthly mortgage payment amount, as well as maintenance, taxes, repair, cleaning, and holding costs for the property.
The best way to reduce these costs is by working with an experienced property manager who has the resources to get you the best deals on some of these expenses.
Make Money From your Chattanooga Rental Property
Do you need help coming up with the best rental price for your property? We can assist with this and all other aspects of property management.
Get in touch and let's talk about how we can help you manage your Chattanooga property best.