San Jose is now the most expensive rental market in the nation, outranking heavy hitters like LA and San Francisco. As a result, longtime residents having a harder time finding a place that suits their budget.
Should you keep increasing rent because the city is known for high rent rates? You may be doing more harm to your rental income than good if you're charging more than your property is worth.
If you're struggling to find and keep tenants, it's time to go back to the drawing board. Read on to learn how to conduct a rental analysis and find out how much you should be charging in the San Jose housing market.
Assessing Your Property
The first thing you need to do is revisit the best and worst qualities of your rental property. This includes:
- Usable square footage
- Number of beds and baths
- Included private amenities (e.g., full kitchen vs. kitchenette, in-unit laundry, etc.)
- Included shared amenities (e.g., pools, gyms, etc.)
Next, you need to assess the condition of your property. You may need to schedule inspections to view properties you haven't seen in several months. Take note of any outstanding maintenance issues or areas that would benefit from upgrades.
Gathering Comps
Now that you have an up-to-date assessment of your property, it's time to look at the bigger picture. Start by evaluating the average cost of rent in your specific neighborhood. Access to public transportation, nearby shopping and entertainment options, and low crime can all support higher rent prices.
It's also useful to look at properties that are similar to your own in size, amenities, and location. Similar properties are your biggest competition and the competition tips in their favor if they're charging less in rent. Remember, even when there's high rental demand, you can still lose viable tenants to other properties that are more appealing or budget-friendly.
Making Calculated Improvements
If you want to charge more than your rental analysis reveals to be reasonable, it's time to make improvements. If you're an accidental landlord, make sure to learn the difference between improving property value and improving renter appeal.
For example, you may not see the ROI on a luxury kitchen remodel in a rental that you would in a for-sale property. Instead, focus on things that would improve your tenant's experience, like upgraded kitchen appliances. Small aesthetic adjustments, like new paint or new carpeting, can also make an impact on the value of your unit to renters.
Get an Accurate Rental Analysis from PMI San Jose
Just because San Jose rent is higher than ever before doesn't mean that raising your rent is to your benefit. If you're struggling to secure tenants, consider conducting a rental analysis and adjusting your rent to a more reasonable rate.
At PMI San Jose, we know that the secret to maximizing rental income is in tenant-first practices. We've taken PMI's 20 years of time-tested services and catered them to meet the demands of the San Jose housing market. Start with your free rental analysis and find out more about partnering with PMI property managers.
