One of the most important parts of being a successful landlord is the ability to price a rental unit correctly. Pricing a rental too high can lead it to sit vacant costing a landlord thousands of dollars in lost rent. Renting the property at too low of a price can lead a landlord to lose out on important profits that they need to maintain the rental and potentially upgrade it to collect even more rent. Many factors must be considered when trying to price a rental correctly. One important aspect of considering how much to charge for a rental unit is the number of bedrooms.
Understanding how the amount of bedrooms impacts rental price is important not just so that the landlord can price the unit correctly, but also to help landlords consider the potential value of a prospective property they are considering buying as well as whether they should spend money to create more rooms within a given space.
According to one source, a one bedroom apartment in the U.S. on average has 51% more square footage than a studio apartment yet the difference between prices can be anywhere between 7% to 43%. Furthermore on average the difference between the rental price of a one and two bedroom apartment in the U.S. is about 15% while the units are generally 41% larger.
However, it is important to note that there are drastic differences between how rental units are priced when considering bedrooms as the main indicator. For instance, in Charlotte one bedroom apartments are generally cheaper than studio apartments whereas in Chicago 1-bedroom apartments are on average 43% more expensive than studio apartments. Furthermore, in Manhattan landlords charge 43% more rent for a two-bedroom compared to a one bedroom apartment, whereas in Memphis there is only a 6% difference in price between a one and two-bedroom apartment.
If you are a landlord, these numbers suggest that as apartments increase in the amount of bedrooms, the profit per square foot can drastically decrease depending on the city in which the unit is located. One factor that appears to impact the price of rental based on bedrooms is the supply of the units within the specific rental market. For instance, in Charlotte studio apartments are concentrated in the downtown area whereas one bedrooms are widespread in the city leading to higher studio prices. Therefore, landlords must consider the location and supply and demand of the type of rental unit they have when deciding how to price their rental unit competitively while considering profit.
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.