Beaufort real estate investors often choose to rent out their properties to unlock a potential source of passive income. You can pay a mortgage, repair charges, taxes from the monthly rental income. However, the most common question that property owners ask is – how much to charge for rent?
On one hand, charging less rent might put you at financial risk, while on the other, charging excessively high rents can repel tenants. This article intends to help you decide how much you can charge for rent.
Here are the important factors that can aid in determining how much rent you can charge for your Beaufort rental property.
Caps by The Rent Control Law
Rent control is an ordinance in the United States that sets limits on charging high rents and protects tenants from evictions due to nonpayment of rent. It is implemented at the state level. Hence, it may vary from state to state.
Rent control laws are not applicable in the state of South Carolina and there are no specific limitations on charging rent by the state. Therefore, landlords can take any rent price provided the tenants agree upon it. No statute states the requirement of notice if landlords want to increase the charges in Beaufort.
The 1% Rule to Decide Monthly Rent
According to the 1% rule, landlords can charge 1% of their property’s total market value, which goes 0.8% to 1.1%. For example, if the value of your property is $600,000, you can charge 1% of $600,000 i.e., $6,000. Consider charging appropriate rent while implementing the 1% rule. Overcharging might lead your potential tenants to lose interest in your property.
Rental Market Demand and Your Competition in Beaufort
The rental market is not always steady. It keeps fluctuating, and the rent varies accordingly. Therefore, it is essential to know the current rental market demand and the competition in your area. In Beaufort, the rental market value has increased by 13% over the last year.
You can decide the price for your rental by analyzing the recent market data.
In addition, you can ask other landlords you know to get an idea of the rent they charge. Make sure you take rent according to the competition and make it your starting point. Also, consider fixing a price that will cover your monthly rental expenses such as maintenance, necessary upgrades, taxes, and more.
Amenities You Offer in Your Beaufort Rental
Tenants prefer the place that makes their life more convenient. As a landlord, you need to focus more on providing your tenants with all the facilities they will require. Identify the advantages of your property and highlight them to gain the attention of your prospects.
Typically, tenants look for adequate parking space, a nice back yard, proximity to public transportation, a safe neighborhood, and a few indoor and outdoor amenities. If your rental provides all these facilities, your tenants will be more likely to pay the rent you are asking.
As a landlord, you have to manage additional expenses such as a mortgage, maintenance charges, property management expenses, taxes, and HOA fees (if any). The rent should cover all these expenses and plus earn you some profit. This parameter can give you a ballpark figure to start with.
Current Economic Conditions
The changing economy at the global level has drastically affected the real estate sector. During the recent pandemic, many tenants faced unemployment and couldn’t pay even minimum rents. Charging high rent during the period would not have benefitted landlords, as tenants would have had to leave or be evicted.
Therefore, considering the current economic situation is necessary while determining the rent. Landlords should stay updated about the ebbs and flow of the economy and accordingly maintain flexibility in rental value.
Landlords must keep a balance between charging appropriately and profitably. While the owner is responsible for providing tenants with rental services that are worth their money, they should also get enough profit to meet their financial goals.
Beaufort Rentals is a trusted property management and leasing company in Beaufort which can assist you in determining how much you can charge for rent for your Beaufort rental home. For more details, contact us at Beaufort Rentals.