"How Much Should I Charge for Rent?" Understanding Your McKinney Rental Analysis

Setting a rental rate that will minimize your investment property's time on the market and maximize your investment's potential is a complicated balancing act. On the one hand, you want to be sure that you make the most out of your McKinney investment property. On the other, you want to minimize the time your property sits vacant—the longer you have a vacant property, the more money you lose.
 
A rental analysis is a tool that consists of multiple calculations that help you determine what rental rate you should set for your investment property in McKinney. Most property management companies are happy to help their prospective clients by providing them with this report—after all, a management fee is typically a percentage of monthly rent, meaning your property manager is equally motivated to set the highest rate that will lease fast.

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What Calculations Are Included in a Free Rental Analysis?

A rental analysis includes many elements that need to be considered when setting a rental rate.

Property Specific Vacancy Rates

While overall vacancy rates might seem like the number you need to track, it is better to look at property-specific vacancy rates. If you are trying to set a rental rate for a single-family home, you need to know the supply and demand for single-family homes more than you need to know the vacancy rates for apartments in the area.

While the overall vacancy rate is helpful (if everything is full, people will start considering other options), there is usually some vacancy for all property types to consider. Knowing how in demand the kind of property you own is will help you set a rental rate that gets applications.

Local Market Trends

  • Do you have a massive number of college students looking to rent in the fall?
  • Do you have an influx of snowbirds looking to rent in the winter months?

Learning the historical rental trends for your location is essential to set the right rates at the right time. In McKinney, we have fair weather year-round for the most part. In a cold state, rents might be lower in the winter to try to entice people to move when they otherwise would not.

The Competition

Looking at the going rates for properties that are just like yours will help you see what the market is willing to pay.

Renters are not always looking for the same things a homeowner is looking for, and are often happy to compromise on an amenity that isn't a deal-breaker to pay a lower rental rate. Compare what other single-family rental properties are going for in your neighborhood—and the communities nearby.

The Lay of the Land

Is your neighborhood home to great schools, good walk scores, and a booming economy due to significant corporate moves to the area? Knowing your local market is crucial to staying ahead of big changes that will impact your bottom line. When Toyota and State Farm moved to Plano, there was a considerable influx of renters and buyers to the market, driving rental prices up while new construction hurried to meet demand.

As you can see, a rental analysis takes into consideration market conditions—not the amount of one's mortgage and desired profit. This is why it is smart to work with a property management company in McKinney when purchasing investments —so you know you are choosing a property that will perform well. Building a rental portfolio that leads to long-term wealth should always start by making smart decisions about the investments you make.

What If I Didn't Set a Good Rental Rate?

New landlords and experienced McKinney landlords alike can make mistakes when setting a rental rate. Sometimes you set a price before the market makes a significant change. You'll generally know that your rental rate is way off base when you see the following signs:

  • A flood of offers right away when listing the property: This means that potential tenants are seeing a bargain and are working to capture the deal before missing out.
  • Too few inquiries: If you've priced yourself out of the market, you won't see many offers coming your way.
  • Aggressive tenants looking to move the leasing process faster: Again, they know this deal is too good to last—and want to get in on it right away.

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How Do You Fix a Rental Rate?

If you set the rate too low, you can increase the rent by a reasonable amount each year at lease renewal—or choose to lease to someone new at a higher rate. A property turn and vacancy can be expensive, so you'll need to weigh the cost of a new tenant against the increased rent to determine if it is worth it.

Hire a McKinney property manager if you need help with your rental rate! At RentHub, we use state of the art analytics to ensure that you make the most from your investment—while also ensuring as few days on the market as possible. You can get started by requesting a FREE Rental Analysis! Our RentHub experts will show you—no strings attached—how well your property can perform.
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