In this third installment, we'll be looking at rental fees & deposits. Renting a home is very similar to selling in that there is a market that influences what you can charge for a home. As in selling, the market for your rental will be largely impacted by location, & currently available rentals.
The better the location of your rental the more you can charge. For instance, a 3 bedroom, 2 bath home near Metro Center is not going to secure the same rent that an equally equipped 3 bedroom, 2 bath home near Arrowhead Town Centre would. And that same 3 bedroom, 2 bath home near Arrowhead, is not going to secure the same rent that an equally equipped home near Desert Ridge could expect. So, location has a lot to do with what you will be able to reasonably charge.
The other factor in determining the monthly rent is the number of other rentals currently available in the same area. Again, this parallels home sales in regards to supply and demand. If there are 5 apartment buildings with availability, and 25 rental homes available within a 3 mile radius all with similar features... 3 bedrooms/2 baths, then you might have to wait a little longer to find a tenant than if there were only 2 apartment buildings (near capacity) and only 10 rental homes.
Of course, there are people who will not want the hassles of renting a home even though it means they might have a 2 car garage, and private backyard, where others might not even consider an apartment because of the common walls & smaller living area. You will need to research the area where your property is located and determine a fair rent. Be sure to qualify your prospective tenants before they sign the contract, and be sure you are comfortable with them. You will be dealing with them again when it's time for them to move out... whether it's their choice or not.
Once you have your monthly rental fee determined, then you'll need to decide what deposits you will charge. According to Arizona law, the amount of the deposits cannot be more than 1.5 times the monthly rent. So, if your monthly rent is $1,000.00, then you may not charge more than $1,500 in deposits no matter how many deposits you create. The total of deposits must be no more than 1.5 times the monthly rent. With that being said, you can charge a deposit for almost anything you want. The most common are: security deposit, cleaning deposit, & pet deposit, but you might request a deposit for yard maintenance, etc. The amount of the deposits can vary, but in the end, the grand total of all the deposits can be no more than 1.5 times the monthly rent of the unit (whether it's a house or an apartment).
Finally, when determining what to charge a deposit for, it's wise to remember that whatever you ask the tenant to maintain on his/her own, might have a much larger cost in the end if it's not kept up than if you had maintained the responsibility of it yourself. For example, the rental you have includes a pool. If you have the tenant maintain the pool, you might get off cheaper (if they actually maintain the pool). However, if the tenant becomes irresponsible or unable to maintain the cost of the pool upkeep, you may have a much larger expense on your hands when the tenants move out or realize that they were supposed to continue treating the pool even during the off-season, than what it would have cost for you to hire a pool service.
In the next installment, we'll look at the unfortunate case of a non-paying tenant. If you have experience with this and would like to share, please do!