You’ve purchased your income property, and you’re on your way to seeing some big investment gains. You’ve poured your heart and soul into fixing it up and making it perfect. Now it’s time to find some tenants, but in order to do that, first you’ll have to decide on what to charge for monthly rent. It’s kind of a big decision, on one hand you don’t want it to be too low because it may attract some undesirable tenants and you want to make a profit from your investment and on the other hand you don’t want to set it too high or it may sit a while before you can find a tenant that’s willing to pay that amount, all the while you’re paying the mortgage and carrying costs out of your own pocket. So how do you determine what to set the rent at? Well, like in all big decisions, you need to do your research or talk to some one who has, a realtor.
Compare. You can start by looking up what we in the industry call comparables. Go on kijiji, MLS or any other forum where people are renting out their properties and find properties that best fit the description of yours and see what other people are asking for rent. OR, you can call a real estate agent that is learned and knowledgeable about rentals and they would probably know right off the top of their head what it would be worth in the current market
Remember that neighbourhood matters. You could have the exact same property in 2 different neighbourhoods and they could be worth totally different amounts. A lot people are willing to spend extra to be in a more desirable neighbourhood or closer to certain amenities like schools or shopping.
It’s all in the details. If you’ve gone the route of improving the property to attract more tenants and increase your profit margin, then keep in mind all the improvements you’ve made when comparing them to other properties. For example, if your unit has been freshly painted and new floors put in you might be able to get away with raising the rent slightly because people are more drawn to aesthetically pleasing spaces.
Finally, you’ve done your research and you feel confident that the figure you’ve chosen is bang on what it’s worth, it’s now time to type up your ad, post it and wait for the phone to ring.