How we price a Durham rental home

Rent is not a number pulled from a market report. This is what actually goes into it when we price a home we manage, written out because the process is usually invisible from the tenant's side.

Comparable homes come first

We look at what similar homes in the same neighborhood have actually leased for recently — not what they were listed at. Asking prices tell you what landlords hoped for. Lease prices tell you what the market paid.

"Similar" means bedroom count, bathroom count, square footage, parking, and condition. A three-bedroom with one bathroom and no off-street parking is not comparable to a three-bedroom with two and a driveway, however similar the square footage.

Then condition, honestly assessed

A house with a new HVAC, updated electrical, and an insulated attic is worth more than an otherwise identical house without those things — not because it looks better, but because it costs less to live in. We price that in.

Then running costs

Where we include utilities, that is in the rent. Where a house is unusually cheap or expensive to run, that changes what the market will bear. A 2,400 square foot house from 1919 and a 1,500 square foot house from 2004 can have similar total monthly costs at very different rents.

Then vacancy risk

This is the part tenants rarely see.

A vacant month costs a full month's rent. Turning a house over also costs cleaning, paint, any deferred work that has been waiting for an empty house, listing time, and showing time. In our experience, vacancy and turnover together can easily represent one or more months of rent once lost rent, cleaning, repairs, utilities, and leasing costs are considered.

So a home priced $75 a month above what the market comfortably supports, which then sits empty for an extra six weeks, has lost money against a home priced correctly. We would rather lease quickly at a fair number.

Why renewals matter

The same arithmetic applies at renewal, more strongly. A good tenant who pays on time and looks after the house is worth real money to us. Pushing that tenant out with an aggressive increase to capture $100 a month, and then paying two months of turnover costs to replace them, takes years to break even — if the new tenant is as good, which is not guaranteed.

That is why we would rather keep a good tenant at a fair rent than turn a home over.

What this means if you are renting

The cheapest advertised rent is not always the cheapest home. Ask what the utilities typically run and what has been done to the house.

You can see what is available now on our available rental homes.