Quentin says that once you’ve bought a cashflow-positive property and taken out long-term debt, deciding on the right rent is crucial, as a wrong decision can lead to vacancy and financial losses. You have to consider the benefits and features of the property location and highlight them to potential tenants. If the property remains empty, it may be due to an overpriced or underpriced rent. For example, setting the rent too high could discourage prospective tenants from even considering the property. Setting the rental price too low for a property in a great location can also turn off prospective tenants and attract lower-quality renters. He emphasizes that setting the right price is essential to avoid months of vacancy.
Quentin further adds that staying competitive in rental pricing is crucial for minimizing vacancy, especially in Ontario’s rent-controlled environment. You should use tools like rentalmeter.com and doorinsight.com to find the average rent for a property in a given area, and check rental websites like Kijiji, Craigslist, or Facebook Marketplace to see current offerings, further adding “setting the right rent will make your profit on your rental income.” Quentin adds that the goals that you want to achieve from your property investment won’t be the same as another investor. However, whatever your goals are, for most investors, rental income should cover the cost of their expenses, mortgage insurance, maintenance, etc.
He says the first few years may be challenging, but the property value and rental income should increase as the property stabilizes. At the same time, keeping rents competitive will also maintain the property’s value. Quentin continues by saying that the rent you can charge when selling a property with tenants depends on several factors, including local and state rules, the economy, and property-specific features such as appliances. If the local economy is weak, rental prices may improve due to a higher demand for rental properties. To establish a competitive rental price, compare your property to similar properties in the same area with the same bedroom and bathroom mix. The rule of supply and demand dictates the rental potential; where demand is higher, the rent will be higher.
Furthermore, to increase rental potential, consider specific benefits of your property, such as appliances, flooring, layout, outside space, views, amenities, and utilities offered. These factors can influence the rent you can charge. You can also compare your property to similar properties in the area. In conclusion, Quentin recommends that to learn more about renting out a property, consider getting “The Property Management Toolbox” and “The Filling Vacancies Toolbox” from Amazon.
Links and Resources
· The Property Management Toolbox
· The Filling Vacancies Toolbox
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.