Maximizing Rental Property Profit in Raleigh: Rent Price vs. Days on Market
System - Monday, March 26, 2018
Maximizing your profit is important when you own an investment home. You want to get the maximum profit on that property, but it doesn’t necessarily mean getting the maximum rent price.
Rental Property Profit: Setting a Competitive Price
Here’s an example. You can list your property at $1,500 a month, and place a qualified renter within two weeks. Or, you can try to earn more, and list it for $1,600 a month. You’ll get $100 more per month, but it will take you two months to find a renter. So, your mortgage payment for those two months will need to be paid without any rental income. That will be about $3,000 of out of pocket costs for you; which is an expensive vacancy.
Rental Property Profit: Vacancy Times
If the property is on the market for a long time, prospective tenants will see that. They can go on Zillow and see how long it’s been listed there. They might give low ball offers if they see it’s been vacant for a long time. So, instead of paying $1,500 or $1,600 a month, they may offer you $1,400. If you’re not getting any other applicants, you may have to say yes and take that offer.
Rental Property Profit: Evaluating Metrics
In this market of Cary, Apex, Raleigh, and Holly Springs, different price ranges have different days on the market. So, properties that are listed for $1,200 will usually rent faster than those that are listed in the $2,500 range. You can look at the metrics for active properties on sites like Zillow. However, talk to a property manager who knows the local market so you can get an idea of how much tenants are paying for the properties that were recently rented.