Houston is a promising place to own a rental home in 2022. The number of single-family rentals has risen by over 14% as more people put their dreams of becoming homeowners on hold in the face of rising real estate prices.
Rents are on the up and up, too, with some real estate agents predicting this may swing the pendulum back in favor of homeownership before too long.
As a Houston landlord, you've got some thinking to do before you set up a rental price for your property. Price your home too high, and you may struggle to find tenants, if you go too low, you'll lose out.
Here's how to get the balance right.
Look at Market Comps
The average renter in the USA pays $1,326 per month, but rents vary widely depending on the location of the home. That's why it's important to find out what people are willing and able to pay in the neighborhood of your rental home.
Make sure you're comparing similar properties during your rental inquiries, you can expect a two-bedroom house to cost more than a two-bedroom rental apartment.
Learn what other landlords are charging, take a look at fair market value estimations proved by the HUD (United States Department of Housing and Urban Development), or do a free rental price analysis.
Pay attention to any considerable shifts in prices in recent weeks, too.
Use the 2% Rule Cautiously
The 2% rule dictates that rent should equal between 1 and 2% of the home's value.
You could use this figure as a starting point for your calculations, but use it in conjunction with neighborhood comps. Remember, home prices have risen at unprecedented rates since 2020, so this percentage isn't as accurate as it once was.
Consider Rental Home Amenities
Market comps are a valuable tool, but it's important to keep in mind that each property has individual attractions for renters. Some homes in your area might not have the awesome amenities your home does.
Top-notch security and private parking justify a higher rental price, along with:
If your home is close to schools, stores, restaurants, and public transportation, you can charge higher rent. Walkability adds up to fuel savings for renters, so they don't mind paying a little extra.
Likewise, onsite amusements like a swimming pool, outdoor kitchen, or tennis court justify higher rentals. You can also charge more if your home is very close to a kids' play park or a dog park to keep every member of the family amused.
What About Your Expenses?
It's important to calculate your mortgage costs and the operational costs of the house before deciding on the rent you're going to charge.
In fact, with home prices increasing as they are, it's best to do these calculations before you buy a rental property nowadays.
The Easiest Way to Calculate Rental Rates
Pricing your rental home right only gets easier with experience. If you want to get it right the first time, rather hire a property manager at the outset of your journey as a landlord.
Don't run the risks of high vacancies or low rents, get in touch, and we'll do the math for you.