Once I accepted the fact we were PCSing to Ft. Wainwright, Alaska (think negative 40 degree winters) from Georgia I had to move from “dazed and confused” to "focused and productive." The biggie on the “to do” list was to get the house rented. But before we could tackle that wee had to figure out the fair market rental value.
When you're renting out your house there are so many decisions to make and so much to do in a short amount of time. Everything can quickly become overwhelming without a process in place.
But it turns out determining your fair market rent is not that hard -- it just requires a process. And having one will save you time so you can move on to more important things like enjoying your favorite drink with friends before saying “see you soon."
How to figure out what to charge for rentThe steps below are summarized from Military Property Project’s ebook, “The Accidental Landlord” and the accompanying step-by-step worksheets. Below we will guide you through the process of determining your fair market value for your rental so you can get to that drink.
1. Start by searching for rentals on militarybyowner.com that are similar to your home. Compare location, size and condition. Check other sites such as zillow.com and trulia.com. Again, compare your home location, size and condition to other similar homes listed for rent on these sites.
2. Find three to four homes that are in the same subdivision or area, same number of bedrooms and bathrooms. These will be your comparison homes. Not in a subdivision? That’s fine, find similar homes in the area closest to your home.
3. Now for the math. Divide the rent amount of each comparison home by that particular home square footage. For example, $1,695 divided by 2,350 square feet equals $0.72 per square foot. Once you have the price per square foot for each of your comparison homes, find the average, then multiply that average by the square footage of your house.
4. If you do your math and end up with a funky number like $1,721, round it up or down depending on additional amenities your home may have or not have compared to the others. Rent amounts are usually round numbers like $1,700 or $1,750.
5. Make a plan. Consider the time-frame you have to lock in a tenant and make deadlines in your marketing plan. Advertise the house at the rent amount you calculated. If you don’t have a tenant by a predetermined deadline, then advertise in more locations to reach more potential tenants. Plan to lower the rent if you don’t have a tenant by your deadline.
For example, if you have two months to advertise, but after one month you are not getting enough potential renters interested in the house, then boost your advertising efforts. If two weeks later you still don’t have a tenant, consider lowering the rent to attract more renters. If your home is advertised well and priced competitively you will probably get it rented in a reasonable amount of time.
Something to consider is that military families commonly arrive to their new duty stations and then look for a rental to move into immediately. Don’t be surprised if you don’t get a tenant until the house is actually available to move into.
Do you have any other tips when it comes to determining the rental value of your home?
Did you find this helpful? You can download a copy of our super handy Fair Market Rent worksheet by downloading our FREE SneakPeek. The Military Property Project was developed by two Army wives, Amy and Lauren. Through years of experience they mastered the art of being a good landlord and have kept the bad landlord trophy off their shelves. Visit them at www.militarypropertyproject.com.
Photo courtesy of Charleston's TheDigital under the Creative Commons license.