Whether you have a duplex in the city or a single-family home in the suburbs, setting a competitive rental price for your investment property is key to your success as a landlord. If you price it too high, your place could sit unoccupied. Too low, and you run the risk of losing money on your investment.

Here are three tips to help you determine if the rent price is right on your rental property:

• Research your competition.
• Know your market.
• Understand your Rent Range.

Research your competition

Take a look at your neighborhood and understand how it fits into your larger town or city. Are you in an up-and-coming area where people will pay a premium to live? Within walking distance to nightlife and entertainment? Near the area’s best schools? Once you know how your location fits into the larger picture and what amenities are nearby, research similarly sized rentals within comparable distances to neighborhood features.

It’s important to know how your property stacks up against other area properties with similar amenities and the same number of bedrooms and bathrooms. Using your competitors as a baseline, you can decide how much more you can charge in rent prices for the extras your property offers, such as in-unit washer and dryer, covered parking or a fenced backyard.

Know your local market

Before setting your price, research your local market. Some cities, such as San Francisco and Seattle, are hard to pin down because rents are rising so quickly, which can make market research feel daunting. But it doesn’t have to be! Start by taking a look at local market reports on Zillow which show the median rent in your area and in nearby towns and cities. You can see if rents are rising or falling, by how much, and if rents are projected to increase or decrease.

Remember that your rental price is typically a dynamic value that changes in relation to your local market conditions and your competition. It is ultimately up to you to decide what to charge and whether to increase (or decrease) rates come renewal time.

Understand your “Rent Range”

While market-level information is helpful, you also need to dig down to the property and amenity level to be sure you’re setting a competitive price relative to the prevailing rents in your area.

That’s where Zillow’s Rent Zestimate® tool comes in. It is an estimate of a property’s monthly rent price, and it can help you determine if the price you want to charge for your rental is within the Rent Range for the size and location of the home.

This video gives you an overview of what the Rent Zestimate is and how it can help you price your rental.

Zillow’s Rent Zestimate is available for 122+ million homes in the country. It’s a helpful starting point for landlords who want to determine monthly rent prices. The home data we have compiled to generate a Rent Zestimate varies by location. Some counties provide all the data we could hope for, but others are lacking such key things as the number of bedrooms and bathrooms, or, in some cases, the square footage of the home. The more data we have, the more accurate the Rent Zestimate. 

We have published a Rent Zestimate accuracy table that shows the level of accuracy at national, state, county and large metro area levels.  Click here to update your home facts. If you haven’t yet claimed your home on Zillow, you will first be asked to verify ownership — a quick and simple process.

This article was updated September 24, 2018