How Do Property Management Companies Determine Lease Rates?

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How Do Property Management Companies Determine Lease Rates?

One service a property management company offers is setting the rent rate for the homes and apartments it's handling. Many owners wonder how these companies come up with the price to charge potential renters, especially when the amount is lower than they expected. Here are two things property management companies factor in when determining lease rates.


The biggest influence on the rental rate for your home is market competition. The management company takes into account not only how much others are charging for similar homes or apartments but also the amount of inventory in the area.

If there are a lot of vacancies in the city, the management team may reduce the price to attract renters, for instance. Likewise, if pickings are slim, the rate goes up.

Be aware, though, the property management company will also factor in the area's housing market. Even though there is a big difference between renting and buying, the two markets do influence each other.

Homes that are too expensive will force people to rent until they can afford to buy, which will drive rates up when inventory becomes scarce, for instance.

On the other hand, a glut of homes on the market due to foreclosures and migration patterns may drive real estate prices down and lower renter's expectations of what they should pay for a place to live, leading to a lower valuation.

Curb Appeal

How the property looks on the outside can also affect its rental price, because curb appeal determines how interested a prospective renter will be in living in the home or apartment. A residence that looks sparkly and nice on the outside will attract tenants who don't mind paying more to live in a beautiful home.

The same is also true for the neighborhood where the property is located. The home could be stunningly beautiful, but you won't be able to command the amount you want for it if the neighborhood looks like there's a trap house on every corner.

Likewise, an apartment complex could be average in appearance, but if the surroundings are maintained in pristine condition, potential renters would probably fight to live there and you could charge more.

There are many other factors property management companies consider when setting lease rates for your property, such as amenities available and the number of bedrooms. It's best to consult with a representative from a local company for more information about pricing your rental. For more information about property management, contact a local real estate office.

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Homes, Properties, Buildings & More: A Real Estate Blog When you think of real estate, what comes to mind? Most people initially think of homes, and indeed, private residences to comprise a pretty big portion of the real estate market. However, empty lots, office buildings, and commercial buildings are also considered real estate. When shopping for any type of land or property, you need to ensure the real estate agent you hire has expertise in the particular type of property you want to buy. For instance, you don't want to hire a commercial real estate agent to help you buy a home. Learn more about the intricacies of real estate on this blog.