Instead of a step by step instruction on how to set rental price let's examine the factors that affects pricing.
Rental Price Tips
Location - Well of course, the primary factor that could affect your rental price is the location of your condo as to any other form of real estate investment. Things such as how accessible is your place, what establishments are near by matters your future tenants would probably be working professionals and executives who need to get to their office fast with less rides (if they don't have a car) and hassle.
Furnishing - Another thing that I realized is that you can actually ask for a higher rental price if your condo is fully furnished. This may no be an advantage to all types of condominiums as most condos would come fully furnished. However, in our situation we bought a 40 sqm bare type condo that we fully furnished so if the rental price defaults at say... 15000 pesos then perhaps I could put for rent for as much as 17000 to 20000 pesos and have 2000 to 5000 pesos positive cashflow.
Amenities -What amenities will be available to the tenant? This could add to the perceived value of your rent, therefore could be a factor in your rental price. Just imagine that you don't have to subscribe for a membership fee if a gym is already available within the vicinity of the condominium. Basically, you should include the association deuce in your pricing and it's up to you whether you want to add a little more. I'm not sure whether you have to break this down to your tenant but I would intelligently guess that you don't have to.
Competition - Competition is always a factor in any business and that includes real estate. Your first or second move is to always research your competition and that includes asking around, searching the Internet, etc. This advice has always been the same for every person I ask who knows some things about the real estate business.
A note for those who are renovating their condo (unit improvement). Try to set your investment to a minimum as you'll have a harder time getting the returns. Just make the unit as comfortable and as visually appealing as possible but don't overspend. Try to set a goal on when you want to get the return on your investment on improvements.
I hope this somehow helped you come up with a rental price. If you have any more ideas, please leave a comment!
Photo Credit: Richard Bitting
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Real Estate
This is something I think about a lot, too, as we bought our condo with the same thoughts in mind. We are considering renting it out furnished when it comes down to it as that may be an important differentiator, and the fact that we have the top floor with 9 foot ceilings may help, too.
Hi Kevin, it might be useful to note too what I was told... Some tenants tend to like units that are bare or unfurnished and unequipped with appliances. This is because some tenants also already have furnitures with them when they move in. So that might be useful to keep in mind. Good choice on buying a condo! Congratulations!
Examine what the rental prices are for comparable condominium rental properties in your area. Set your price in relation to those conditions and in light of the return on investment you want.
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