How to Price Your Rental Property

 

Knowing where to start when it comes to managing your own rental property is the hardest part.  Breaking the process down into a series of steps is the easiest way to stay organized and stress free while managing your investment.  In case you missed it, check out our 9 Steps to Help You Manage Your Rental Property Without a Property Manager.  Once your property is “rent ready,” you need to determine how much to charge for your rental property.  With online sites like Zillow providing their “Rent Zestimate,” it’s a fairly straightforward process to determine the market value of your rental property.

Click here for our tried and true rent-ready checklist to ensure you have completed all of the necessary steps before placing your rental on the market.

You need to be aware of the following three exceptions when using a quick and easy online estimate:

  1. The description on the online site does not match your actual property description.  Maybe the online site sees your property as a 3 bedroom 1.5 bath home, but it is actually a 4 bedroom 1.5 bath home.  Maybe your rental has a pool and the internet site doesn’t show that in their description.
  2. Properties in your immediate area (within ¼ mile radius) are very different from your property but match your property in terms of square footage, bedrooms and bathrooms.  This is particularly common if your rental is part of a new infill development project and is surrounded by significantly older homes.  Those homes could potentially rent for less and in turn, push down the rental value of your property.
  3. There haven’t been any recent rentals in your immediate area.   All of these internet sites use data mining algorithms to determine your property’s rental value, so without recent comparable listings, the algorithm doesn’t take into account recent increases or decreases in rents and could be using old data.

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Because of the variabilities mentioned above, you should do your own market analysis and see what is currently available in your area for properties that most closely match your rental listing.  Do this on any of the many other websites including rentals.comTrulia or realtor.com.  You can also leave it to the professionals and search for local property management companies in your area that will usually provide a free market analysis!

Click here for a FREE comparative market analysis from Mesa Properties!

For Rent Sign

Once you determine the market value of your rental property you still need to decide at what price to set the rent.  Many owners don’t spend enough time considering the price they are willing to accept on their investment property.  There are three schools of thought on pricing a rental property:

 

  1. Price the property above the market price.
    • This is an easy trap to fall into, but is actually the proven worst way to price a rental property.  Sometimes, an owner decides to ignore the market and make the decision based on their out of pocket costs.  If the monthly mortgage, taxes, insurance and management costs are $2,850.00 then I need to charge $2,850.00 plus what I want to net on the property above my costs…. Never mind the property’s market value is $2,400.00 per month.  As foolish as this sounds, some owners actually think this way. Their properties typically sit on the market for a very long time, costing the owner more money in the long run then if they simply priced their rental property at or below the market.  This price methodology is sometime referred to as “death by a thousand cuts.”
    • The other risk in pricing the property above the market is that it actually attracts weaker, not stronger, tenants.  Tenant’s with high FICOs and good jobs are in their current position because they made good and prudent buying decisions in the past.  Any owner who thinks these savvy potential applicants will rent their property above market will usually be disappointed. The weaker applicant, who often times has already been turned down on other properties and is now desperate to find a place to live, are much more willing to pay over market rent for a home.
    • Remember the three basic needs for people are food, clothing and shelter.  When any one of these three basic needs are threatened, people often get desperate.  They are more prone to lie on an application and apply for properties that are overpriced because they don’t have any other options.  The owner who accepts this type of tenant can look forward to late rent, unpaid fees and eventually a potential eviction. And when they do finally get possession of the property, it will probably require expensive and extensive repairs that need to be done before the property can be rented again.
  2. Price the property at the market price.
    • In a strong rental market, this is an acceptable strategy. You should expect lots of requests for showings and lots of interest in people wanting to submit an application.  If you begin marketing the property and find the activity is not at the level you expected, go back and reevaluate your market analysis to make sure you are priced at the market.  Be sure to check currently active listings that match or closely match your property’s description. Sometimes, another landlord will list a property below market to get a quick lease and you will need to wait until that listing is filled if you are committed to leasing the property at the market price.
  3. Price the property below the market price.
    • This is actually the savviest way to price the property. Pricing your property even $50-$75 below market ensures that everyone serious about finding a place to live will be looking at your listing.  You will get even more applicants that you will not qualify, but you will also get the strongest applicants currently in the market for a rental property looking and hopefully submitting an application to rent your property.

At Mesa Properties, we have helped hundreds of homeowners and investors price their rental properties at the necessary rates to keep their vacancy times to a minimum while ensuring they are competitive for their market and receiving an acceptable return.  If you would like more information on our services or how we can help you get the most our of your rental property, contact us or request a quote today!

For a comprehensive guide to managing rental property, check out this resource.

Meghan Miller

Accounting

Meghan is one of the newest members of our Mesa Properties Inc. Team and works in our accounting department. She studied accounting at Chaffey College. Prior to joining Mesa Properties Inc., Meghan was a bookkeeper for 6 years at a CPA firm that primarily worked with dairy farms. She enjoys working for Mesa Properties Inc. because she is able to use her accounting experience in whole new ways and also enjoys the friendly office environment that has been established here. Meghan resides in Rancho Cucamonga with her husband and two sons.

Rebecca Anthony

Administrative Assistant

Rebecca is one of our administrative assistants and is one of the warm and friendly voices you will hear when you call our office. She has a strong customer experience background from her past role with Sprint and loves assisting our owners and tenants. When she isn’t working, Rebecca loves to bake and spend time with her son and family.

Steve Shwetz

Managing Broker

Steve, the Managing Broker and Founder of Mesa Properties Inc. & Mesa Real Estate, began his real estate career buying, fixing and reselling distressed properties in Southern California. Seeing the long-term opportunity in a buy and hold strategy, Steve began acquiring residential real estate to build his own real estate rental portfolio. As a 10 year owner of an international service franchise, Steve saw an opportunity to take his experience in customer service and developing systems and processes and apply that experience to the world of property management and real estate. Prior to starting his own businesses Steve held various senior and advisory level sales positions with IBM Corp., B. Braun Medical, Insight Direct & Reach Local. Steve is a licensed real estate broker and holds a Bachelors in Business from the University of Southern California.

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Sheryl Shwetz

General Manager, Administration

Sheryl helped to establish Mesa Properties Inc. with Steve. Today, she serves as the backbone of all things administrative for the company. Sheryl oversees all the details of running a property management company including on-boarding new owners, converting applicants to tenants, and paying all vendors. After earning her B.S. in Business Administration from the University of Phoenix, Sheryl worked for a software development company running the support and training department and writing user documentation. Sheryl also gained experience at an advertising agency servicing non-profit organizations where she drafted vendor instructions for merging customer data with various fundraising campaigns. Sheryl has 3 sons and home-schooled them through various stages of their K-8 education. Each one is now thriving in adulthood.

Sam Shwetz

Business Development Manager

Sam is the Business Development Manager at Mesa Properties Inc. focusing on engaging both new and existing owners of residential and commercial properties.  Sam is a U.S. Navy veteran having served in the Nuclear Field on the USS Ronald Reagan aircraft carrier.

After his military service , Sam worked for a lighting control company as a field service engineer on various projects including extensive work on Apple’s new corporate headquarters in Cupertino California.

Sam and his wife Sydney are homeowners in Ontario, CA where they live with their golden retriever.

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Verenice Guardado Alvarado

Lead Office Administrator

Verenice is the office administrator to our Mesa Properties Inc. Team. She is also licensed and manages properties in the high desert. She earned her Associate’s Degree in Business Administration from San Joaquin Valley College and used her skills working in customer service. Previously, Verenice worked 4 years with Target where she trained sales associates and developed strong communication and teamwork skills. Through her position at Mesa Properties Inc., Verenice strives to find the right tenant for each owner and the right home for each tenant.

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Mark Parmenter

Property Manager

Prior to joining Mesa Properties Inc., Mark worked in the construction industry as a member of the carpenters union. He holds an Associates degree in Business, he is a licensed agent, certified in property management and enjoys the unique challenges of property management. Mark is a homeowner himself and experienced with on site multi-unit management. He understands the delicate balance of working with tenants as a landlord, owner and neighbor.

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Joshua Long

Property Manager

Joshua is a property manager to the Mesa Properties Inc. team. With a background in sales, Joshua gained the strong communication skills necessary to be an effective problem solver when handling any situation he is faced with. Growing up, Joshua watched his mother work as an apartment manager for over 20 years. Now, as a property manager, Joshua focuses on addressing the needs of both renters and homeowners. He is a focused hard-worker who ambitiously seeks to become better in his position and to gain more knowledge at whatever task is at hand. Joshua is an Upland area native and is a licensed real estate agent. He currently holds 2 Associate’s Degrees and is working towards gaining his Bachelor’s Degree in Business Administration from CSUSB.

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Bridget O'Gorman

Assistant Property Manager

Bridget is now a property manager to the Mesa Properties Inc. team. She currently resides in Victorville with her daughter. In 2014, Bridget obtained her Associate’s Degree in Business Administration from San Joaquin Valley College with a 4.0 GPA. Prior to working for Mesa Properties Inc., she has held various customer service jobs, where she gained better understanding of how to handle different situations and how to work with each person on an individual level. In addition, Bridget worked as a safety manager and recruiting assistant for a transportation company, giving her experience in processing applications and completing safety inspections. Bridget enjoys working for a company where she is able to assist others and to work in a changing environment, which is always giving her a chance for a new experience.

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Julia Morrison

Property Manager

Julia is a property manager to the Mesa Properties Inc. Team! Julia currently holds an Associates degree in Criminal Justice. She is currently enrolled at CSUSB with plans of going to law school after. Having worked 4 years in a customer service field, Julia has gained much experience in working with difficult situations and learned how to be a team leader. Prior to working in customer service, Julia worked for an HOA, where she gained computer & phone skills and learned how to handle an overflowing stack of paperwork! She enjoys working with people and assisting them in finding a home that they love. Julia became a homeowner in 2016 and currently resides in Upland with her fiance.

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Autumn Janda

Tenant Screening

Autumn gained her real estate license in 2011, but has been in the property management field since 2005. She obtained her Bachelor’s degree in Business Administration from CSUSB in 2009. Prior to joining Mesa Properties Inc., Autumn gained much of her experience being an assistant property manager for commercial properties for six years! She also spent five years working in a company that worked with commercial, industrial, and apartment properties. Autumn enjoys working for Mesa Properties Inc. because she gets to work with new tasks everyday and likes meeting new people. She is currently a homeowner in Arizona, where she resides with her husband and daughter.

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Donna Pulver

Receptionist

Donna is the receptionist to our Mesa Properties Inc. Team since November of 2016! Her tasks include answering calls, scheduling showing appointments, processing adverse action letters, assisting with applications, and assisting customers in the front desk. Having worked over 25 years for a real estate appraisal company located in Covina, Donna has gained much experience in providing great customer service. Donna currently lives in Victorville.

Carmen Franco

Administrative Assistant

Carmen is one of the newest members to the Mesa Properties Inc. Team! Her tasks include showing available rental properties, assisting with phone calls, and completing inspections. Carmen graduated from University Preparatory High School in 2011. She has earned her certificate in Business Administration from San Joaquin Valley College with a 4.0 GPA. Getting to know the team at Mesa Properties Inc., Carmen has been inspired to pursue a career in property management. She is eager to learn more about property management and prides herself in bringing a positive and caring attitude to everyone and everything she does. Carmen resides in Apple Valley with her husband and 2 children.

Amairani Palacios

Transaction Coordinator

Amairani is the transaction coordinator to the Mesa Properties Inc. Team! Her main role is coordinating real estate transactions for the real estate agents. Her other tasks include assisting the property managers with inspections, calls, and emails. Having been a member in the AFJROTC program for Victor Valley High School for 3 years, Amairani has gained experience in coordinating tasks and working with other team members as a Team Leader. Amairani has completed the needed real estate courses and is working on obtaining her real estate license.

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Michael Melendez

Real Estate Agent

Mike has been practicing real estate in Southern California since 2006. His family and friends have always been involved in home loans, new construction, and rehabilitation projects, deepening his knowledge of all aspects of the industry. As a Realtor, Mike’s service’s consist of helping buyers and sellers obtain property that best suits their interests. Finding his clients great deals, maximizing their proceeds and finding them the right home is what he does best. Mike understands that real estate is one of the biggest purchases and sales that can be made, and choosing the right agent is an important decision. He has both the experience and technology to help his clients meet their goals.

DRE: 01781635

Sonya Dod

Real Estate Agent

Sonya Dod has been a licensed real estate agent since 1989, Sonya is an agent who facilitates successful transactions for buyers as well as sellers, boasting a solid reputation for making deals with honesty and integrity. Since Sonya was raised on a Texas farm, she isn’t afraid of hard work and long hours. After her parents moved to California 40 years ago, they started buying investment properties. So she grew familiar and comfortable with the process of finding, fixing up and selling properties at an early age. Having served as an underwriter, processor and loan officer, Sonya has the knowledge and experience necessary to help sellers and buyers avoid wasting time opening meaningless transactions. What’s more, sellers are protected by her expertise as she requires buyers to provide written permission to speak directly to lenders. This unique approach fosters quickly closed deals and eliminates false representation.

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Raymond Palacios

Administrative Assistant

Raymond is an administrative assistant to the Mesa Properties Inc. Team! His tasks include performing inspections, showing properties, serving documents, and assisting with phone calls. Raymond holds a Bachelors in Business Management from California State University of San Bernardino. Having worked 4 years at a customer service field, Raymond has gained much experience in assisting and providing great quality customer service. Prior to working in customer service, Raymond volunteered and worked 6 years for a food distribution center where he gained the experience in efficiently coordinating important tasks within a company.