How to determine rent prices for tenants

Question

How do you determine what to charge tenants when you have not paid off the property? Is there a certain ratio that should be between the amount of the mortgage and the amount the tenants should pay? I’m sure this has a pretty simple answer, but I am very new to BP and still learning a lot.

Erik W. · Answer

Whether you have debt or not is irrelevant.  You should be charging fair market value (FMV).  Tenant do not care if you have debt or own free and clear.  In fact, they shouldn't know that piece of information unless you volunteer it.  If they want the place, they pay the rent, period. The way you learn FMV is by doing research on your competitors.  Get on Zillow, Zumper, Craigslist, and drive around and call on "For Rent" signs within 1/4 mile of your property.

Brock Mogensen · Answer

A simple market analysis will give you an idea of what you can charge for rent.  Look at other properties in the area to see what they are charging.  Make sure to factor in property age, size, amenities, etc.

Michael King · Answer

As the other guys say, check your local market. I find it tends to go by price per square foot. In my market, a very good guide is $1 per square foot.

Paul Shannon · Answer

The debt you owe doesn't relate to what a tenant should pay.  The rent should be fair market value.

Pull up your house on Zillow.  Click on every house on the block and a few blocks around.  If there are pictures of the home, scroll down to "price and tax history".  You can see what the property rent was listed for, if it is a rental.  The pictures will give you an idea if you're property is nicer or more basic.  Price accordingly.

Anthony Wick · Answer

@Jack Woodward

The ratio of property cost and rents is a determination to be made on if you should buy the property and determine if it cash flows.

But, what you owe on a property has nothing to do with what rents should be. Another great resource is Facebook Marketplace.

Sam Shueh · Answer

Check out rental rates of interest. Often drive around and make calls. You want to list lower not higher than your competition.

How to determine rent prices for tenants

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