There are a lot of factors to consider when choosing the rental price for your property. An owner’s objective with the property, and their strategy, will also dictate how they approach the pricing process. Guidance from a property manager will also drive the conversation around pricing to ensure a property is rented for the most possible while still attracting the right tenants and in a timely manner.

Thankfully, we are experts in rental pricing strategies. In this article we’ll help to guide you through the process of selecting the right price.

Rental Prices in Florida

Having a clear strategy for your property is essential but there are a few things to consider.

• Seasonal pricing, what time of the year is it? Are we entering peak leasing season or are the holidays approaching?
• Property condition in relation to other nearby properties that are competing for the same rental amounts.
• Is an owner more conservative, thus ok renting a property for slightly less to find a tenant faster?
• How much money does an owner have to contribute to a property for repairs after a tenant has moved out, or that may be necessary to achieve market rents.
• What comparables are nearby, and if there is not a strong example, how do we choose where to price the property?
• Is it cheaper to rent or buy? Are more people renting or buying?
• Are people moving to the area, or leaving the area?
• Leased comps are a trailing indicator, if the market is going down or up, how do you know?

Here is a hypothetical chart that outlines some of the factors…

Seasonal Considerations

For our market here in the Tampa Bay area, we typically see our peak months for renting our properties, and thus high competition for rentals, in the March to September window.

January and February the activity starts to pick up after the holiday season but doesn’t seem to reach its peak into March/April.

If an owner has a vacancy or lease renewal in the September/October timeframe then there should be more urgency to price it aggressively. This is due to the fact that filling a vacancy during the end of the year is the most difficult. Renewing a lease to end earlier in the summer, or extending it into January or February would be a wise choice. Lease renewal offers could be more conservative with little to no increase, if the intention is to try to avoid a vacancy in those months.

Owner Risk Tolerance 

If the market is seeing increasing rents or decreasing rent prices, this is going to play into an owner’s overall perception of the market and strategy for the property. Vacancies kill cash flow, so if we are in a downward trending market, lower pricing to stay ahead of the market, or to limit a resident leaving, makes a lot of sense.

Personally we approach pricing from a more conservative approach with lower increases as time goes on, to maintain a high occupancy rate but also achieve an owner’s goal of cash flowing and meeting their financial objectives.

Financial Stability 

Money doesn’t grow on trees, but we wish it did!

Do you, as the owner, have the financial means to renovate an apartment that has been lived in for 15+ years from a resident, if they decide to leave? If there is a scenario where you can keep this resident at $1,300/mo versus asking for $1,400/mo and having a potential vacancy it would be wise to keep them in place if that renovation to bring the property up to market rents is going to be $10,000-20,000.

If the neighboring properties are achieving $1,400/mo but they are renovated, and yours isn’t do you have the funds to make repairs to bring it up to market conditions? If you don’t have income for 2 months during a renovation and marketing period, can you afford it? Is it more important to have rent growth or just an occupied unit? This can only be determined by the financial standing of the owner and what they can stand coming out of pocket if the unit is vacant.

Rent Comparable Nearby

When we are looking for rental comps we consider a few things, but ideally we want to find a like-kind property. Here are some rough guidelines we keep in mind. Let’s use a standard 3 bedroom, 2 bathroom home that is 1,500 sq ft (heated).

We would try to find an exact match for the bedroom, bathroom, size and condition, but that is pretty rare, so we have a few guidelines we operate by.

1. First we try to look at LEASED comps in the last 180 days. If there are none we may go back to a year but not longer than that.
2. We want to stay within .5 miles of the subject property but we DO NOT want to cross any major things like highways, rivers, train tracks, etc because this usually signals boundaries of neighborhoods where pricing can vary.
3. We like to look for properties within 200 sq ft/-.
4. For the age of the property, this can vary widely and depends on what was built, if we have a 1980 built home, but only have comps from 1925 homes and those built in 2024 then we have to use a guide of price per sqft or some averages to come up with a better estimate.
5. Ideally we find a 3/2 home, but we may have to loot for 3/1 or 4/2 homes also, and make an adjustment.
6. We want to consider the condition of our property, is it nicer or outdated compared to what is rented nearby?
7. Lastly, another thing we would look for is the amount of time it took to lease a property nearby, lets say our friend down the street with a similar house rented for $1,500 in 60 days, but we know the market average is 30, then a better realistic price would be $1,400 so we lease it in a few weeks, thus saving an extra month of mortgage payments and renting it quicker.

Supply and Demand

If the market is seeing people move out of the area, rents will go down.

If there is a lot of new construction, there could be too much supply, rents will go down.

If there are lots of people moving to an area, with less supply, rent prices will go up.

Leased prices (what people actually paid) not “for rent” (which is what people are asking), is the indicator we want to look at, but its a trailing number. In a down market, if a unit rents for $1,500 you’d actually need to price it at $1,400 or 1,450 to stay ahead of the downward curve.

The historical averages of the area will give you insights, and a property manager can help you understand what’s happening in the market, and what their performance usually is for properties within the portfolio they currently manage.

Bottom Line

As a landlord, it is crucial to understand your pricing strategy and how you will market the property. A property rented for less, is better than a vacant property. Be conservative, reduce the price quickly when you are not getting the showings or applications you want.

If you have any questions, please reach out to Out Fast Property Management today. We are a leading property management company in Tampa, FL, and have worked with hundreds of landlords and investors. We’d love to work with you too! 

Contact us today at 813-324-5852 or email us at admin@outfastpropertymanagement.com 

Disclaimer: This blog isn’t intended to be a substitute for professional legal advice. Laws change and this information may become obsolete at the time you read it. For further help, please get in touch with a qualified attorney or an experienced property management company.