With rents consistently going up and the San Diego rental market remaining competitive for tenants, there may be some confusion around how you should price your rental property.
As always, the right price depends on the market. There are a number of other factors that will impact your rental value as well, and they’re specific to your investment property. A fair price depends on your rental home’s size, location, and condition. You can earn a bit more if you have special amenities in the home, and you’ll have to settle for lower rents if you’re working with older appliances, a more remote location, or systems that have not been updated in several years.
There are also tenants to consider. With prices and demand rising, a lot of tenants in San Diego are worried about what they can afford. You want to attract responsible, well-qualified residents who can afford your rents.
We’re talking about how to fairly price your San Diego rental property so that you’re competitive on the market but also earning as much as possible.
Educate Yourself on the San Diego Rental Market
To attach a fair rental price to your property, you need to understand the local rental market.
We often hear owners talk about the amount they expect to earn or want to earn. That’s not always consistent with what the market will demand. When we are pricing a rental home, we have to follow the market. If the home is not fairly priced, there will not be any residents trying to rent it.
Local expertise is important when you’re evaluating the market. Consult with a San Diego property manager who studies the market daily and is aware of the latest pricing and tenant trends. It will save you time, avoid long vacancies, and allow you to attract a well-qualified renter who also understands the market and the value they’re getting in your property.
A good management company can provide a comparative market analysis. This will give you an idea of what homes similar to yours are renting for in your specific San Diego neighborhood.
Fair Rental Prices Reflect Location
Certainly, you know that location matters when we’re talking about real estate. It impacts the value of your rental real estate, too.
A fair rental price can push a little higher when your rental property location includes:
- A good, well-rated school district
- Easy access to commuter routes and highways
- Proximity to grocery stores, restaurants, entertainment, and recreation
- Walkability (either wide, suburban streets with sidewalks or a location that’s within walking distance of amenities and attractions)
If your rental property is in a remote location that’s difficult to find or close to a highly commercial or industrial neighborhood, you might have to lower your price a bit in order to attract good tenants. You’ll also find your price point needs to come down if there’s a lack of infrastructure, such as Wi-Fi, sidewalks, and grocery stores or if crime is becoming a problem.
Property Condition: A Pricing Factor Owners Can Control
It’s frustrating, but there’s not much you can do about the market. You cannot move your rental property to a new location. These are pricing factors you can’t influence very much. However, you can control the condition of your rental property, and its maintenance and aesthetics will also have an impact on how you price it.
Well-maintained homes are always going to bring in more rent than those that are old, deteriorating, and in need of constant repairs. Tenants don’t want to live in a home where the walls are falling down and the appliances are barely working.
If you want to provide a fair price that’s a little higher than the market averages, make some strategic upgrades and updates that are likely to get the attention of good tenants.
You’ll have to invest a bit of money, but when you choose cost-effective upgrades, you’ll earn back everything you spend by attaching a higher rental price tag to your home.
What can you do when you’re trying to lift the rental price of your home? Try these ideas:
- Fresh paint
- New or newer appliances – and be sure they’re matching. A stainless steel refrigerator, white stove and black microwave screams, “I’m a rental”, rather than “I’m a home”!
- New floors. Tear up the carpet and consider putting in hard surface flooring, at least in the common areas. You don’t have to splurge on hardwoods. Faux wood, laminate, tile, and even vinyl that’s good quality can look great.
- Better lighting. This applies to interior lights (especially in kitchens and bathrooms) as well as exterior lights.
- New hardware in the kitchens and bathrooms. Install new faucets, drawer pulls, shower curtain rods, and mirrors. Another low-cost/high impact upgrade is interior door hardware – hinges and knobs. You’ll be amazed at how new and modern your home looks.
- Pretty landscaping. Keep it low maintenance, with drought tolerant plants, but make it look nice.
Improving your property condition will allow you to charge more in rent and remain competitive in the local rental market. Your home will be what sets the standard for other properties.
Rent Control and San Diego Property Pricing
When you’re renting out a single-family home in San Diego or a multi-family unit in a newer building, you’re likely exempt from the statewide rent control laws that went into effect in 2020. However, rent control will impact how you set your own rental price.
With inflation pushing rents higher, even rent controlled properties are raising rents by 10 percent.
This gives you an opportunity to earn more rent as the average rental rate keeps climbing in San Diego. You don’t want to go much higher than 10 percent if you’re raising your rent, however. When your rental increase is significantly higher than what other properties are able to do when they increase rents, you’ll only look like your home is overpriced.
We know pricing a San Diego rental property is tricky, especially with the market so expensive right now, and so many tenants competing for the best-priced homes. If you’d like some advice on how to fairly – but profitably – price your own rental home, please contact us at San Diego Residential Property Management. Our team follows the market closely, and we know the nuances of each neighborhood. We also know what tenants are looking for and how much they’re able and willing to pay for a great rental home. We’d be happy to serve as a resource for you.