Renting out your condominium unit—whether for a long-term or short-term lease—is one of the best ways to earn passive income. But before you count your potential earnings, have you already thought about how much you’re going to charge for rent?
Computing your condo rent is a tricky business. Charging too low can hinder you from maximizing your potential earnings while charging too high might not get you any tenants at all.
There’s no standard way of pricing rent. Still, you can follow these steps to help you determine the right price for leasing out your condo:
1. Know your condo’s appraised value
First things first: Figure out what your condo is currently worth in the market. More often than not, your property has a bigger value now compared to when you first bought it. Do not base the rent on how much you bought your unit in the first place.
Though there are websites that can help you estimate your condo’s current value, the best thing to do is to find a home appraiser. They can give you a more accurate estimate of your condo’s actual worth based on factors like home condition, upgrades, and location.
2. Consider your amenities and location
Your unit should have the location and amenities that can back up a high price tag.
Some amenities that you should consider include size, view, layout, and parking space. If you furnished your unit with the latest appliances and upgrades, then you should factor that into your monthly rent.
Some tenants might prefer unfurnished units for a lower rental rate, while others go for furnished units for a hassle-free move-in even if the rental rate is a bit higher.
An unfurnished studio unit can fetch a rate between P10,000 to P15,000 a month, while semi-furnished and fully furnished units can go as high as P12,000 to P17,000 and P18,000 to P25,000, respectively.
If your unit also comes with a parking space, you can either include it in your monthly rent or lease the parking space separately.
Condos located on higher floors are also considered more desirable to tenants.
Your neighborhood and location also play a huge role in your rental charges. You can charge premium rates if your unit is located near entertainment spots, hospitals, schools, and offices.
The location also dictates your target market. For instance, Avida Towers Turf BGC and Avida Towers Asten in Makati are both located near business districts, so you can expect your potential tenants to be business executives and yuppies who have cash to spare.
Knowing your target market can help you assess your tenant’s financial capabilities and make your condo more appealing to them. There are several ways to reach out to your target market, such as posting in company bulletin boards, posting in forums and social media networks, and asking for recommendations from friends and family.
3. Consider your monthly mortgage bill
Still paying your mortgage? Renting out your condo is a viable opportunity to pay your home loan without eating into your main source of income.
If you’re going to use your rental profits to pay your home loan, make sure that the cost of your rent is at least equal to your monthly mortgage bill. But don’t forget to factor in other things, such as taxes, repair costs, association dues, insurance, and even vacancy costs.
4. Check out what other landlords charge
Keep your rental rate competitive and reasonable by knowing what other unit owners are charging their tenants.
You can look at real estate listings and websites to get an idea of how much others are charging for rent in your condominium and nearby areas. For at least two weeks, keep track of the units that are getting rented out quickly and those whose owners have lowered their rent.
You might also want to offer incentives to attract more tenants, such as free Wi-Fi or use of appliances. Just make sure that you include those costs in your rental fee.
If you need help leasing out your unit, you can reach out to your developer’s in-house leasing group. For instance, if you are an Avida unit owner, you can try Leasing Services by Avida Land for a hassle-free way of renting out your condo unit.
Ready to invest in a property?Avida Land offers a wide array of condominium units in prime locations all over the country. Visit their website or any of their showrooms to find your ideal unit.