Setting Market Rent (Phase 1B)

Learning how to appropriately price your rental is one of the most important skills a self-managing landlord can develop to drive financial success. If you price the rental too high, you risk extended vacancies leading to lost revenue and increased carrying costs. Price the rental too low, and you are leaving hard-earned profit on the table. The goal is to price your rentals at current market rent.

Current Market Rent and the 5% Rule

At a basic level, current market rent is the optimal price to attract a qualified tenant within a reasonable amount of time. What exactly is a reasonable amount of time? According to real estate investor and self-managing landlord, John T. Reed, your goal is to always have 5% vacancy. Assuming there are no other factors such as poor marketing, if your vacancy rate is greater than 5%, your rentals are priced too high. If your vacancy rate is less than 5% or you have a waitlist, your rentals are priced too low. According to Reed, a waitlist is not a good thing. It means you are foregoing profit.

It’s important to note that these guidelines were in reference to multi-family units. Unless you have a large portfolio of single-family homes, this rule of thumb should be modified. According to the 5% rule, a single-family home should be rented within 2.6 weeks. That is an aggressive timeframe. To amend the 5% rule for small single-family home portfolios, we will target a range. The chosen rental price should produce a qualified tenant within two to four weeks. Anything less than two weeks, the rental was likely underpriced. Over four weeks, your asking rent is too high.

You may be saying to yourself, “This is great, I want to choose the rent amount to produce a signed lease within two to four weeks, but how the heck do I know what number to choose?”

Pricing Your Rental

There are many online tools that will calculate a probable market rent for you. Some of these include:

• Zillow: Price My Rental

• Rentometer

• RentRange

Also, you should locate rental comps in your area by searching rental listing sites like Zillow, Redfin, Apartments.com and even Facebook Marketplace in some markets. Remember, these are just data points. If Zillow says you should charge $2,000 a month for your 3-bedroom, 2-bath rental and Randy the out-of-town landlord is asking $2,200 a month for his 3-bedroom, 2-bath home, but it has been vacant for three months, the current market rent is likely somewhere below both of those prices. You need to use your knowledge of the local market and any recent changes that could be driving rents up or down to determine your price. If your listing is not receiving interest after two weeks and you are certain it’s not a marketing problem, you likely need to lower your asking price regardless of what other sources are saying. Also, don’t hesitate to call other landlords or property managers in the area to ask what they are seeing in terms of current market rent. The longer you manage your own rental properties, your confidence and ability to set appropriate market rents will increase.  

Common mistakes self-managing landlords make when setting rent:

1. Refusing to lower rent

   Markets are driven by supply and demand, and the rental market is no different. There are economic factors that can occasionally drive the price of rentals down instead of up. Landlords who refuse to accept that they may have to ask less for the next lease than the previous lease will lose money.

2. Pricing based on your costs instead of the market

   Some landlords want to set rent based on their costs: mortgage, insurance, taxes. The reality is that if your mortgage is $1,200, and current market rent is $1,150 for that property, pricing your rental at $1,200 will cost you more money due to extended vacancies. Hopefully, you are never in that situation because the economics of the rental don’t make sense and selling the property is likely a better option unless the property is in a high appreciation area and you are able to cover the negative cash flow in the meantime.

3. Reluctance to raise rents

   If the market will bear, which it will in most circumstances, a landlord should increase rent every year. Yes! Every year. There are a few exceptions (see mistake #1), but this is generally true. The increase does not have to be substantial, but a $20 increase every year over five years is easier for a tenant to stomach than raising $100 all at once.

Setting market rent can be intimidating at first, but with research and experience, you will become an expert in your market.

Disclaimer: The information in this article is for educational purposes only and should not be taken as legal or financial advice. For specific legal questions, consult a qualified attorney. For help managing your rental in compliance with state and federal law, reach out to a professional property manager.

Know the Law: Fair Housing and Landlord-Tenant Regulations (Phase 1A)

Familiarizing yourself with landlord-tenant laws is a crucial early step in preparing to self-manage your first rental. Self-managing landlords are held to the same legal standards as corporate landlords and professional property managers. A lack of knowledge won’t excuse violations.

Below is a short summary of some of the foundational laws pertinent to self-managing landlords, whether you own property in Atmore or Orange Beach.

So get comfortable, grab a cup of coffee or tea, and dive into the Fair Housing Act! You’ll feel more confident in your ability to operate a compliant rental business. Below is a partial list of laws for the self-managing landlord to study.

Fair Housing Act

Title VIII of the Civil Rights Act of 1968 — also known as the Fair Housing Act — was designed to prevent discrimination in the sale, leasing, and financing of homes. The U.S. Department of Housing and Urban Development (HUD) is responsible for enforcing federal fair housing laws. According to the Fair Housing Act, landlords are prohibited from discriminating against tenants based on:

1. Color

2. Religion

3. National Origin

4. Sex (added in 1974)

5. Disabilities (added in 1988)

6. Familial Status (added in 1988)

You can find more information and a link to the Fair Housing Act here: https://www.justice.gov/crt/fair-housing-act-1

Alabama Uniform Residential Landlord and Tenant Act (URLTA) – Ala. Code Title 35, Chapter 9A

The Alabama Uniform Residential Landlord and Tenant Act (URLTA) was originally passed in 2006, taking effect January 1, 2007. There have been adjustments since then, so make sure you are referencing the latest version when doing your research. The Act is a modified version of the URLTA.

This law outlines habitability standards, rules for security deposits, eviction procedures, tenant rights, and disclosure requirements.

You can find the entire law on the Alabama Legislature’s website: https://alison.legislature.state.al.us/code-of-alabama?section=35-9A-101

Lead Based Paint Disclosures

In 1992, Congress passed the Residential Lead-Based Paint Hazard Reduction Act. The law requires landlords to provide a completed lead-based paint disclosure form and a copy of the “Protect Your Family from Lead in Your Home” pamphlet.

https://www.epa.gov/lead/lead-based-paint-disclosure-rule-section-1018-title-x

Hopefully, after reviewing these laws, you feel more confident in your ability to run a rental business by the book. These examples represent just a few of the laws that landlords must follow, not a comprehensive list, but they provide a solid foundation.

Self-managing rentals isn’t easy, and there is risk involved, but it can be done! If this feels too overwhelming, it’s wise to seek guidance from a competent real estate attorney or work with a professional property manager.

Disclaimer: The information in this article is for educational purposes only and should not be taken as legal advice. For specific legal questions, consult a qualified attorney. For help managing your rental in compliance with state and federal law, reach out to a professional property manager.

How to Manage a Rental Property Yourself: Introduction to the Self-Managing Landlord Guide

Anyone who's owned and self-managed rental properties will tell you it can be a great way to build long-term wealth, but it can also be challenging and full of surprises.  Self-managing is completely doable, but it requires patience, careful planning, and sound execution to succeed. Done right, self-managing rental properties can build long-term wealth, give you control, and save thousands in management fees. Done wrong, it can drain your time, money, and peace of mind. This Self-Managing Landlord Guide is broken into three phases of the rental lifecycle. Each phase explores crucial steps required for successfully managing your rental properties.

Below is an outline of the guide:

Phase 1: Preparation (Before You List)

a.       Know the Law: Fair Housing and Landlord-Tenant Regulations

b.       Setting Market Rent

c.       Policies, Procedures, and House Rules

d.       Required Disclosures & Compliance

e.       The Lease Agreement

Phase 2: Finding and Securing Tenants

a.       Marketing Your Rental Property

b.       Tenant Prescreening and Screening

c.       Lease Signing and Move-in

Phase 3: Managing the Property

a.       Maintenance, CapEx, and Contractors

b.       Tenant Communications, Conflicts, and Evictions

c.       Turnovers and Preparing for the Next Tenant

Each post in this series will explore one part of the rental lifecycle, giving you the tools and knowledge to self-manage with confidence. When the series concludes, we’ll package everything into a single downloadable guide for easy reference.

The Atmore Rental Market: South Alabama’s Best Kept Secret?

Atmore, Alabama is quietly becoming a sought-after spot for real estate investors and homeowners alike. With its small-town charm, proximity to Pensacola and Mobile, and ongoing community development projects, Atmore offers a unique blend of affordability and growth potential. According to Zillow, the average home price of $151,964 is well below the national average and remains lower than many surrounding areas. This makes Atmore an attractive market for buyers looking to stretch their dollar.

Rental demand in Atmore is also on the rise, fueled by steady economic development in surrounding areas. Novelis is currently building a $4.1B aluminum plant in nearby Bay Minette, which is already generating construction jobs and will create nearly 1000 full-time jobs at the plan once it opens in 2026. Additionally, ArcelorMittal announced plans to build a $1B steel plant in Mobile County, anticipated to open in 2027. These are just two of many examples of businesses contributing to the nearly $70B of economic output generated within the Mobile MSA, Pensacola MSA, and Daphne-Fairhope-Foley MSA. This makes Atmore an excellent market for investors interested in building rental portfolios. However, self-managing a rental property can be time-consuming, especially when it comes to marketing, tenant screening, rent collection, and maintenance.

That’s where professional property management in Atmore, AL comes in. By partnering with a trusted property management company, landlords can maximize their rental income while minimizing stress. From handling day-to-day operations to ensuring legal compliance, property managers make it easy to own investment property in Atmore without the hassle.

If you’re considering buying or renting out a property in Atmore, now is the perfect time to explore your options—and let an experienced property management team help you succeed.