One way property investment yields returns is by profit through rental. If you have a good occupancy rate on your residential property, this is a reliable, regular source of revenue. But this only works if you can find occupants and keep them reliably paying rent every month.

The best way to keep occupancy rates high with tenants who want to stay for the long haul is to set competitive rental rates. Here's how you do that.

Market Analysis

This should go without saying, yet many people forget this foundation step of the rental process. You can't set competitive rents if you don't know what you're competing against. Look at the rental properties in your areas and pay attention to all "tiers." Even if you're not providing a luxury or lower-income property or for residence, it's a good idea to know where along the spectrum these rates lie in a particular area.

With a good understanding of the rates, you'll know whether you're setting your rent too high or too low for the area the property is located in. This will give you a better chance to attract and retain the kind of residents you're hoping for occupancy.

Balance Your Profit Potential

Of course, another factor for setting rent is your own profit. As a general rule of thumb, reasonable revenue from properties is derived from between 0.8% and 1.1% of the total value of the property. So, if you have a residential property with a total value of $300,000 and you decide to set your rent on the lower end, you may charge $2400 per month.

For lower-value properties, it's better to play this more conservatively. If a property's total value is $100,000 or less, it's a better idea to restrict rental rates to 1% or less. This is in keeping with maintaining competitive rates that won't be an outlier in your area and potentially scare off hopeful new residents.

Be Aware Of Environmental Factors

Beyond knowing what the market environment of your area is like, depending on your investment goals and preferences, having a good understanding of other environmental factors can play a key role in setting competitive rent. Seasonal factors, for example, can play a role.

For instance, if your investment goals include providing student housing, the time of the year plays a critical role in potential residents' search for housing. You can make the most of this by strategizing your residential offerings to these crucial periods and anticipating what the rental rates will be like from competitors.

Work With A Property Manager

Finding residents to maintain high occupancy rates, or, perhaps more importantly, finding the right residents who will respect the property and reliably pay rent on time with no conflict or difficulties, is just one of the things that working with the right property management company can do. This goes a long way toward stabilizing your revenue and giving you more options to remain competitive.

If you're thinking of investing in residential properties and would like to improve the management of your investments when the time comes, contact Occupancy Solutions and let us help.