Managing property as an independent landlord means most of the workload is on your back. From making sure the property is running with the right and valid permits, down to how much tenants are paying. It can be a difficult task to juggle too many tasks at once as a landlord, but that’s what businesses come with.

You’re offering your property as a commodity to consumers, which means you’d have to market it as something desirable and would add value to their lives. Leasing a property doesn’t mean you should charge as much as you can to get the most money out of your property, but rather charge what’s appropriate based on different factors that vary from location to the income of the people in the area.

It’s a challenging task as a landlord, but tenants would love to be charged the fair market rental value that’s justifiable given the amenities, location, size, and comfortability of the property they will be paying to rent.

Before you even get to landing with the exact figure, you should know why you should go through all the work of researching an area and the current rental market there. Going too high can lead to rental voids while going too low can hurt you financially.

Here are reasons why it’s essential to charge the right rental rates:

1. It will be easy to find the right tenants that pay on time.

Aside from having to deal with tenants complaining about leaky pipes and loud neighbors, the bane of landlords is payment problems. It’s a big concern because tenants who don’t pay on time or at all can result in evictions, which can cost even more due to court and legal fees. The time it takes to find a new tenant that will occupy the vacated space also costs time and money.

Charging the right rent will help you meet the right tenants. The right tenant can afford the rates you set and can pay without difficulty. Setting the rate too low will attract non-targeted tenants instead of your ideal ones. While setting too high will give you a hard time finding tenants at all, which risks your income.

Getting the sweet spot will require you to consider the average income of the renters in your area, which means you should look to renting to people with similar incomes to make it easier for you to fill vacancies.

2. The right rate will cover the mortgage and other costs.

It’s undeniable that your property is an investment. A costly one. The appropriate rent will allow you to cover the mortgage and other carrying costs and still make an income without difficulty. You’ll risk having payment problems if you charge too low and attract bad tenants, and the same also goes for charging too high and risking void periods that bring in no income at all.

It’s even more difficult to make tenants stay and sign new contracts with you if your property loses appeal due to lack of amenities maintenance and the abundance of unruly tenants who don’t pay well. Charging what’s appropriate based on how much it’ll cost to keep your property operational should go along with doing solid research about potential renters in your area. The data you gather will give you rough figures that you can base your final rates on.

3. You can maximize the profits from rent.

Leasing a property is a business. As a landlord, you’re the business owner who wants to maximize the profits and live a decent life through the help of your business. The right rental price will help you pocket the right percentage from your rental profits to make a living off leasing your property.

Be careful not to charge too high in an attempt to get more from the monthly rental income, because you’ll risk not having any income at all due to vacancies. The same goes for charging too low because you’ll have little to nothing to keep for yourself.

The importance of setting the right rates doesn’t only work for the benefit of your tenants, it should also work on your benefit as an owner.

How much should you charge?

Defining the exact amount you should charge is an entirely different ordeal. It’s just as important as knowing why you should stay within a range that’s appropriate for your property, yourself, and tenants.

The amount you’ll charge will be based on variables such as your competition, the property’s value, the seasonality, and many more. It’s a more complex task that would benefit from knowing your target renters’ income, preferences, and financial stability as a property owner.