Renting Out Your Apartment? Tips on How to do it Right

The apartment industry can be very profitable, but the problem is the market is very competitive. If your apartment unit stands out, either being an inexpensive alternative to standard units or a high end unit, your main advantage will be your rent rate. Being able to determine how much to charge for your unit can be hard, if you charge too much, you won't be able to find a tenant. If you charge too little, you will take a loss each month. The true key is to find a balance between your expenses, market rates, and your profit margin in your area.

Property Expenses

The rent that you are charging should be able to cover all the basic expenses that you would get from owning the property. This should include the insurance premiums, mortgage payments, and basic utilities such as sewage, garbage, and water. You will also need to figure in income taxes, property taxes, and other business related type taxes.

Maintenance Expenses

Being a landlord means that you have to be able to anticipate maintenance that is related to damages that have been caused by the tenant, wear and tear, and other issues that happen as the apartment ages. Although a security deposit can help to offset the damages that the tenant causes, you are responsible for updating, upgrading, and repairing the worn out items, or break downs from normal use. You need to estimate how much money you will need in order to maintain a unit for a year, then add this into the rent. It is even smart to put back a small portion of the rent money each month to help pay for these little issues as they happen.

Comparative Properties

Once you have the expenses figured out, research the rate for other similar places that are in your area. Look for units that have similar footage, amenities, and rooms within your borough or county. Your tenants will be doing the same type of research to see if your apartment is fairly priced. If your price is higher than the average in your area, you may turn away any potential tenants, which keeps your unit empty and you stuck with the costs.

Profit

If you happen to want to turn a profit from renting the apartment, you need to calculate what amount of revenue that you are wanting to bring in on top of the other expenses. If you have a set amount that you need to earn in order to be successful, then you need to factor this into your rent after the expenses. Otherwise, begin by setting your profit margin by 10 to 15% of your monthly costs for maintaining and owning the unit. Just see how well the amount compares to the other apartments within your area that you have researched, then adjust them as needed.

Evaluating your rent

Each year, or more often, reevaluate the amount that you are charging for rent. Go through the process each time to see if your expenses have increased, if so, then it would be time for you to raise the rent. Also, keep on top of the changes within the market trends by reviewing the rates of nearby apartments.

Source : articlesbase.com