Written by: Rita Magallona
Not all condo buyers plan to live in their units. Instead, some investors rent out their condos to generate passive income. If you are planning to go this route, you need to figure out how much to charge for rent.
Guesswork isn’t enough. You need to sit down, crunch the numbers, and weigh the factors that may affect your pricing. This way, you can come up with a reasonable rental fee – all while getting a good return on your investment.
What are the factors that affect condo rental rates?
1. Condo location
Your condo’s location is the key factor in determining your rental fee. Properties found in business districts have higher values than those in the suburbs. That’s no surprise, as most urban renters are professionals who wish to live closer to the office to cut back on travel time. If you are targeting families, proximity to prestigious schools may also affect your pricing.
The more amenities there are nearby, the higher you could set your rental fee. Condos within walking distance of public transportation, shopping malls, supermarkets, and restaurants often command higher rental fees. After all, convenience is one of the major attractions of renting a condo.
2. Property value
The rent you charge is also influenced by the value of your property and the purchase price. Your rental income should be enough to pay for the condo amortization, property tax, association dues (if you decide to include that in the monthly rent), insurance, and maintenance costs. You can only add a reasonable profit margin once these basics are covered.
3. Unit size and layout
Size matters. The bigger your condo, the higher you can charge for rent. After all, the same was true when you first bought your condo, as purchase prices are computed per square feet.
Another major factor that could affect your rental fee is the layout. How many bedrooms and baths does it have? Again, more means higher rent. How many windows? Does it have a view? Does the unit have high ceilings or a loft? Consider these features when computing your rental fee.
4. Condo facilities and amenities
Aside from the surrounding environs of the condo, the building itself can provide value to your tenant. Developers exert every effort to create a luxurious environment with a wide range of amenities for residents.
Aside from the standard swimming pool, gym, and playground, what else can your condo building offer? And it’s not all about relaxation. Practical features like a clothes drying cage or private parking may help boost your rental price.
5. Furniture and appliances
You could offer your condo as bare, semi-furnished, or fully furnished. As a rule of thumb, the more appliances and furniture included in the unit, the higher the rental fee. Keep in mind that you also have to budget for repairs and replacements for these items.
6. Length of stay
The standard lease period is one year with the option to renew. Would you consider offering a longer lease for lower rent, ensuring that you would have a tenant for a longer period? Determine the pros and cons of offering a standard versus an extended contract, and be ready to present them to your potential tenant.
7. Fee inclusions and exclusions
As a condo owner, you would need to pay for utilities like electricity, water, internet, and landline telephone, as well as the association dues of the building. Determine which of these would be included in the stated rental fee and which ones aren’t. Typically, landlords do not include the consumables like electricity and water in the rental fee, which means the tenant will have to pay these bills separately.
8. Neighborhood rates
Still unsure about your rental pricing? Check out the various “For Rent” ads in your area to give you a better idea of how much to price your condo rent. Take note that rental prices may peak during certain months. For example, if you are renting your condo to families with children or university students, you can command a higher rental fee near the opening of classes.
How flexible are you willing to be on pricing? When you sit at the negotiation table, be prepared to listen to what your potential tenant might propose and evaluate if it is acceptable or not. Be ready to compromise to reach a win-win arrangement that meets both your needs.
Did you know that you can compare rental fees in your neighborhood with Ohmyhome? Download the Ohmyhome mobile app from the Play Store or App Store.
Ohmyhome was launched in the Philippines in September 2020, following the company’s establishment of a tech team in the country in 2017. Ohmyhome was originally founded in 2016, and subsequently rose in Singapore as a leading PropTech solution and licensed real estate agency.
Ohmyhome expanded into the Philippines so that Filipino home seekers can have a real estate partner that they can trust to have their best interests at heart and can be relied upon to provide exceptional services throughout the entire property journey.
Featuring thousands of properties across many of the Philippines’ major real estate brands, Ohmyhome differs from other local platforms by going the extra mile and extensively helping buyers narrow down the choices and find the property that best suits their budgets, home needs, and lifestyle preferences.
The company’s Real Estate Agents not only help in the shortlisting of options, but also provide professional services through the entire purchasing process. These include assistance in property inspections, negotiations, the finalization of the Conditions of Sale, deposit collection, the submission of property documents, as well as providing buyers regular updates.
Ohmyhome helps Filipinos find their dream homes, all while making sure each real estate transaction is complete and is an efficient and enjoyable experience.