Setting Rent the Right Way: Avoid Guesswork and Maximize Your ROI
Let’s face it, setting the rent for your property is one of the most important financial decisions you’ll make as a landlord. Get it right, and you’re bringing in steady income with quality tenants. Get it wrong, and you could face costly vacancies or months of undercharging.
So how do you land on that perfect monthly number? Hint: it’s not by relying on Zillow’s “Zestimate” or asking your neighbor what they think they could get.
Here’s why guessing can cost you, and how to price your rental the smart way.
The Cost of Guesswork: Too High vs. Too Low
If you overprice your rental, even by a little, you risk it sitting vacant for weeks (or months), bleeding income with every passing day. And once that rent is lost, it’s not coming back.
If you underprice it, you're leaving money on the table every single month. Worse, in California, if your property falls under rent control caps, starting low can limit how much you can raise the rent later—even if you realize your mistake.
The solution? Use data + strategy.
Let’s break it down into two clear steps.
Step 1: Understand the Market with Real Comps
Forget those automated pricing tools, they miss key details that only local market insight can reveal. Instead, focus on gathering real rental comps for properties truly comparable to yours.
Where to Look:
- Major rental sites: Zillow, Apartments.com, Realtor.com
- Local property management company websites (especially in Davis, Sacramento, or Woodland)
What Makes a Good Comp?
You want as close to an apples-to-apples comparison as possible:
- Location: Same neighborhood or a very similar nearby area
- Type & Size: A 3-bed, 2-bath house should be compared with other similar 3/2 homes of roughly the same square footage
- Condition & Amenities: Is your unit newly renovated? Does it have central A/C, a garage, in-unit laundry, a fenced yard? Find comps with similar features
- Recency: Focus on listings or rented properties from the last 30–60 days. Rental markets shift fast!
Adjust for Differences
No two rentals are exactly alike. Maybe your comp has a two-car garage, but your property has a brand-new kitchen. Make mental price adjustments to account for these trade-offs. A place in a top school district or close to downtown will rent for more, don’t ignore those value drivers!
Once you’ve done this legwork, you’ll have a realistic rent range based on what similar homes are actually renting for.
Step 2: Choose Your Price Strategically Within That Range
Let’s say your research shows similar homes are renting between $2400–$2550.
Should you list yours at the top? Maybe… but maybe not.
Here’s where strategy comes into play. It’s not just about getting the highest possible number, it’s about maximizing your annual return.
Think in Terms of Time + Money
Pricing at $2550 might be technically possible, but if it takes 6 weeks to rent out, that’s 1.5 months of lost rent. On the flip side, pricing at $2475 or $2500 might attract multiple great applicants in just 2 weeks.
Over the course of 12 months, which one actually earns you more income?
Often, choosing a slightly lower price to minimize vacancy will net you more money overall. Not to mention, it gets a quality tenant in the door faster.
Market Conditions Matter
- Hot market with low inventory? You may be able to push the top of your rent range.
- Slower market? Price competitively to fill the unit quickly and reduce downtime.
Smart pricing is a balancing act = data + timing + tenant quality all play a role.
Price with Purpose, Not Emotion
Setting your rental price isn't about what you wish it would rent for. It’s about:
✅ Using real comps
✅ Understanding hyper-local trends
✅ Adjusting for your property's unique features
✅ Choosing a strategic number that reduces vacancy and maximizes long-term income
We actually walk through this full process in Chapter 5 of our FREE Essential Guide to Rental Property Success, including tools, examples, and pricing calculators.
👉 Download E-book here
👉 Click here for free consultation
Feeling Unsure? We’ve Got You Covered
If you're not confident about pricing your rental, especially in Davis, Sacramento, or surrounding areas, we offer a Free Rental Analysis as part of our services. It’s a great way to get local, data-driven insight tailored to your property.
Pricing your rental isn’t a one-time decision, it’s a crucial piece of your investment strategy. Take the time to do it right. Stop guessing and start earning, now!
