Understanding what you can charge your tenants is far from arbitrary. Setting the rent in particular can be tricky ” especially if you’ve just spent hours investing your time and sweat into renovating and scouring your rental unit to make it sparkle. Nothing will straighten out an emotional based decision from a home owner regarding rent amounts, than a solid presentation of the market trends.
But your prospects aren’t likely to be impressed that you laid the tile. Instead, they’ll quickly point out that the color of the carpet doesn’t match their furniture, but if you lower the rent $300 per month, they’ll consider taking the unit off your hands, almost as if they’re doing you a favor.
Stand firm when you encounter this and be willing to make small concessions to appear flexible. Desperation is a terrible thing to exhibit in front of any renter, so be prepared to walk away if they do not listen to your offer. Maybe you’re someone who has trouble bargaining and holding out for the top fair value dollar, kind of like my mother-in-law, a sweet but overly generous woman ” especially when it came to yard sales.
In addition to setting the rent, you need to make the following decisions before a tenant moves in:
The amount of the security deposit: Setting security deposits is a function of not only market conditions but also limitations on the amount you can charge and whether that amount’s fully refundable. Each state established the guidelines on how deposits can be treated by landlords, so knowing that is important. Determining whether you want to pay your tenants interest on the deposits you hold is also subject to law, but certain advantages can warrant doing so even where not required ” especially for long-term tenants.
The best way to make these decisions is to understand your local real estate market and conduct market surveys to see what others are doing. Your required deposit has to stay in pace with what your competition is charging or you will be left in the dust with out a renter.
The type of rental contract: Depending on your situation, a month to month lease, or a long term one may be better for you, and may become a major leverage tool in negotiations. Such conclusions are often reached after conducting a market survey and understanding the pros and cons of each type of contract.
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