In 2020, Parker, Colorado, was rated as one of the best towns to live in and still remains an attractive option. If you've invested in a property in Parker, you've made a wise decision.
But how do you choose how to set your rent prices? How does one determine rental valuation?
This guide will break a few myths about rental property pricing. This will help you charge the right rent price as you seek tenants.
Here's what you must know:
Your Rent Has to Match Your Security Deposit
According to Colorado law, there's no limit on how much you can charge as your deposit.
This means that your security deposit can be a higher price than your rental fee. However, you should do this with caution. Most tenants will expect to pay a deposit that's the same price as their rental fee.
Often, landlords may wish to charge a high-security deposit to cover the cost of damages. But a high fee might deter potential tenants.
The best solution is to include a clause in your rental agreement stating that tenants have to pay for damages.
Inflation Allows Me to Raise Rent
During the rental period, you can't raise your rent prices. But what happens when you want to renew your lease?
While you're allowed to raise rent due to inflation, it's a myth that it's considered acceptable. Some tenants will understand, but others may feel you're taking advantage of the situation.
You have to remember that your tenant will also struggle due to inflation. Don't presume that they'll be able to pay a higher rent price.
There Are No Limits
Rent control is currently illegal in Colorado, though there have been discussions to implement it.
Even without rent control, you can't raise your rent to exorbitant rates. The best tenants will expect you to keep your rent at the same price. If you raise it, it'll have to be within reason.
To set a rental price, you'll have to look at similar properties. You'll have to charge within this range. If you own a four-bedroom house, you'll have to charge around the average price for this structure.
You can also increase the price based on location. A quiet suburb can be desirable. A house near the city center is also a great option for charging high prices.
Your tenants will also have to pay bills. You'll have to calculate how much they'll pay on average. You don't want your rental fee to be a huge burden on them.
Now You Know About Rental Valuation
Now you know about rental valuation and can decide how to set your prices.
It's a myth that your security deposit has to match your rent price. In Colorado, there are no limits on how much to charge. But it's best not to set it higher than your rent.
You'll deter lease renewals if you raise your rent price due to inflation. You also can't go overboard when setting these prices.
If you need help with renting, you need PMI Parker by your side. We've got consistently positive reviews, and we look forward to hearing from you!