Strategies to Price Your Rental Units

Determining rental costs for your units is no easy task. After all, you need to make sure to cover your costs and make a profit, but you don’t want to be priced out of your surrounding market.

The first thing to do to make sure you’re offering competitive pricing is to study your market. Look at the features and amenities offered versus price. Try to compare what you find in your surrounding area to the amenities and features offered in your own units and price accordingly.

Of course, in addition to several similar and average rental prices in your area, there will most likely be extremes both high and low. Low extremes in rental prices, or pricing below the competition, are often set to beat out all competitors, but usually sacrifice some more luxurious amenities to keep prices down. If your apartments are updated, clean and of good quality but lack features usually reserved for larger buildings, like a work-out center or laundry room, consider getting an edge with pricing below your competition.

High extremes, or pricing above the competition, are usually used by those apartment buildings hoping to convey a certain image of luxury. If you’ve invested a lot of time and money in your units and building adding specialty features like stainless steel appliances or extra square footage, you can probably get away with the slightly higher price you need to cover those costs. There are many renters who are willing to pay more for a luxurious living space, both to get the features they want and also to convey a certain image.

Another strategy called odd pricing may be used for seasonal rent specials. This method sways some people by giving the impression the price is still under what is thought of as too expensive. For example, a monthly rent of $975 looks like a deal compared to $1,000. Because odd pricing still keeps the rent fairly close to the original price, current tenants won’t be too disappointed if they find out about their neighbor’s special deal.

Whatever pricing strategies you use, be sure to revisit them from year to year. Repeat your study of the surrounding area and keep in mind the overall economy before you automatically raise rent. Both current and prospective tenants will appreciate a landlord who explains the reasons behind the pricing as well.