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4 Absolute Rules for Setting Appropriate Rent Prices

Here are the absolute rules for setting rent prices in your rentals. As the rent comes in, it has to be high enough for you to be able to afford all expenses, and for something to be left over as your cash flow. What we often see is landlords pocket the money left over after debt service, and then go write an article for BiggerPockets about how great their cash flow is. This conversation is very market specific, but we are talking about owning rentals that are within the 55th to 70th percentiles, within the range of what’s available in the market place. I tell all of my investor friends that if they find a deal worth doing, I’ll partner with them on it. Well, my friend sent me one because he thought there was a ton of value add. This is to say that while the in-place rents were around $525, his research indicated that rents of $675 were achievable. For example, an 850-square-foot unit that rents for $675 a month is $0.79 per square foot. $0.79 x 600 = $474 Now, in most markets, as units get smaller in size, the per-square-foot price goes up. But if you follow the rules above, you will avoid 95 percent of mistakes.