Apartments, houses, vacation rentals, and condominiums dot the landscape of San Diego. Owning and renting out these properties can be a profitable business venture, but only if it’s done wisely — property owners and those working in property management in San Diego must charge rents that are attractive to tenants but also cover expenses and turn a profit.
With that in mind, here’s what you need to know about setting competitive rates on rental properties and a few factors that you’ll need to take into account as you work with your property manager.
Research the Market and Comparable Properties
Start by looking at rental prices in your area. Online platforms like Zillow and Rent.com provide high-level information on current trends and rates for San Diego rentals.
Specifically, you’ll want to look for properties that resemble yours in size, location, and amenities. This includes the number of bedrooms and bathrooms, square footage, property condition, and any other relevant features. Once you’ve found a few comparable properties, you can look at the rental price to establish a baseline for your property.
Determine Your Property’s Strengths and Weaknesses
Next, put yourself in the shoes of your potential tenant: Is your property someplace they’d like to live?
Consider the location, amenities, security, property condition, and tenant parking. Is the location undesirable? Are the appliances in need of an upgrade? Are maintenance issues resolved frequently enough?
If you take an unbiased, objective look at all the potential advantages and disadvantages, you can understand what might sway a tenant’s decision.
Analyze Costs
Don’t just evaluate the base rental price. After all, there’s more to property management in San Diego than the price of the space itself. You’ll also need to keep in mind property taxes, insurance, maintenance fees, mortgage repayments, and homeowner’s association fees.
A fair rental price covers all of these costs while allowing a modest profit margin, which can be expressed as a percentage or fixed dollar amount.
Consider Incentives and Discounts
Think about sweetening the deal by offering incentives to new tenants. For example, you can waive or reduce rent payments during the first month. You could also provide a discount for longer lease agreements or early renewals. Other perks may include free utilities and newly upgraded appliances.
These incentives will attract more interested renters, but you’ll need to make sure they don’t put too much of a dent into your margin.
Price According to Seasonal Demand
Many San Diego property owners adjust their vacation rental rates according to seasonal demand. Whether it’s due to the beautiful SoCal weather or popular events, the demand is higher during specific parts of the year, giving you a great excuse to bump up the price by a modest amount.
You can also offer a discount for rentals in off-peak times like winter, offsetting the risk of higher vacancy rates by incentivizing tenants to choose your property when they have more options.
Keep a Cap on Additional Fees
It’s not uncommon for property owners to charge tenants more than just their monthly rent: application fees, security deposits, pet fees, amenities, and parking may be included as well. However, you don’t want to go overboard on these supplemental fees — too many additional charges might turn them off.
A decent rule of thumb is to keep these fees between 10% and 20% of the monthly rent. You’ll also want to ensure you’re transparent with tenants about how much they’ll have to pay on top of rent (and why).
Check State and Local Laws
Federal laws like the Fair Housing Act and the Americans With Disabilities Act apply to renters all over the country. However, laws among states, cities, and localities differ greatly. Some areas have rent control regulations, rules on security deposits, required notices of rent increases, and zoning laws that could impact what you’re legally allowed to charge.
Therefore, it’s crucial to stay current with any relevant regulations that may apply to your rental property. Neglecting these rules (intentionally or unintentionally) could result in hefty fines.
Fair Prices for Your Tenants (and You)
Renting out a property can provide lucrative income, especially when you work with property management in San Diego. By setting reasonable and affordable rates, you can see a steady stream of income while keeping tenants happy.