One of the most important things you will do as a landlord is set the rental price for your property. The amount of flexibility you have depends on whether you own a rent controlled unit. This is an important consideration when you are deciding on a price, so make sure you know the rent control regulations and how they apply to your investment.
If you have a single family house that you are renting out, it may not fall under the rent control restrictions in San Francisco. If that is the case, it might be better to get a good tenant into your property sooner rather than later. Instead of setting the rent high and keeping it there until you find someone willing to pay it, you have the flexibility to price your house at or even below what the market demands. That way, you won’t lose any rental income by keeping the house vacant. You also have the ability to raise rent at the end of the lease term. Typically, in San Francisco a lease for a single family residence is for a period of one year. You can raise rent when it’s time for your tenants to renew that lease.
A different approach is required when your property is rent controlled. In this case, you want to set that rent as high as possible as soon as it’s on the market. It will be worth it for you to wait and hold out for a higher rent. The reason for this is simple: at the end of the lease term, you have restrictions on how much you are legally permitted to raise the rent. So, if you rent that place out at an amount that is too low, you aren’t going to have the opportunity to make up for it when it’s time to renew the lease. It’s better to keep the rent high and wait for a qualified tenant who will pay what you’re asking.
Understanding the rent control ordinances in San Francisco can be a challenge, even for experienced landlords. If you have any questions, or you need help determining how much you should charge for your rental property, contact us at Leading Properties, and we would be more than happy to help you.