One of a kind property rental, How do I price it?

[Kevin Barbot]

Hi everyone,

I own a property in a highly sought-after rural area of Lee County, Florida, which has been under my ownership for the past 12 years. Initially, my family and I lived in this house for a couple years before deciding to rent it out, anticipating a market recovery from the 2008-2012ish recession. The property is beautiful, featuring a single-family home of 2700 sq ft with 4 bedrooms, 2 baths, and a den, plus 2 barns on 5 acres, was purchased for $400,000. Our mortgage payments started at $2300, but due to increasing property taxes and insurance, they have alarmingly risen to just under $3300. The tenants, who have been with us for nearly 10 years and are interested in renewing their lease for another long term (3 years), began renting at $2900 a month and are currently paying $3000. They have horses and other farm animals and have been exemplary in maintaining the property and managing minor repairs independently.

A recent search revealed zero similar acreage properties available for rent, underscoring the uniqueness of this rental home. Despite the property's substantial equity, the rising costs have put me in a challenging financial situation, as my monthly expenses now exceed the rental income. Notably, rental rates for single-family community homes in the vicinity average around $2500 a month, albeit for smaller properties without land.

One of my concerns is the continuation of rising taxes and insurances, locking in a rental rate for 3 years could once again put in the negative. 

Selling the property isn't part of my plan, as I intend to perform a 1031 exchange for a mountain home in the West closer to my retirement, which is still 8 years away.

I would greatly appreciate your insights and advice on how to navigate this situation. Thank you in advance for your guidance!