How to price a rental so it doesn't sit empty

This guide is for landlords and property managers in Canada and the US pricing a home for a new tenant. The way to price a rental is to find four to six similar homes nearby, adjust their rents for the differences from yours, and price near the middle of what’s actually renting. Asking for the highest rent you might get can earn less over a year, because a few extra weeks empty can cost more than the higher rent brings in.

It’s easier to see with a real worksheet. Here’s one two bedroom condo priced from scratch.

The home

A two bedroom condo of about 850 square feet, on the sixth floor, with in-suite laundry and one parking spot included. The building is about fifteen years old, and the unit was painted last year. It’s available August 1.

Step one: find the comparables

Look for homes that are as close as you can find to yours: same area, same number of bedrooms, a similar size and age. Homes that have rented recently are the best evidence, because they show what renters actually paid. Active listings are useful too, but they show asking prices, and a listing that has sat for a month is telling you its price is too high.

Here are five found for this condo, with what sets each apart from it. Otherwise they’re similar, with parking and in-suite laundry. The figures are illustrative.

Home	What’s different	Rent	Result
A	800 sq ft, no parking	$2,350	Rented in 10 days
B	900 sq ft	$2,650	Listed 5 weeks
C	Shared laundry	$2,450	Rented in 2 weeks
D	820 sq ft	$2,500	Rented in 1 week
E	1 bed and den	$2,250	Rented in 1 week

E is a different kind of home, so it comes out. B is useful in a different way: at $2,650 it hasn’t rented in five weeks, which marks a ceiling.

Step two: adjust for the differences

For each remaining comparable, ask what it has that yours doesn’t, and the other way round, and adjust its rent to estimate what yours would get. The amounts depend on your market, so use what parking or laundry is worth where your home is.

A has no parking. If parking is worth about $100 a month there, A suggests about $2,450 for this condo.

C has shared laundry where this one has in-suite. Add about $50, and C suggests about $2,500.

D is very close, slightly smaller and similar otherwise. It suggests about $2,500 to $2,525.

That puts the realistic range at about $2,450 to $2,525, with B showing that $2,650 is too high.

Step three: pick the number

Before settling on a number, check whether any rules limit the rent for a new tenant where the home is. Most of Canada and the US let you set it freely between tenants, but there are exceptions. In Quebec, the lease has to show the lowest rent paid in the previous twelve months, and a new tenant can ask the Tribunal administratif du logement to review a higher one. Rent-stabilized apartments in New York City have their own limits too.

Within the range, the position depends on what you want. Pricing at the top brings fewer inquiries and a longer wait. Pricing a little lower brings more renters, more choice between applicants and a faster fill.

For this condo, $2,475 sits in the middle of the range, below the homes that rented fastest at $2,500 and well under the ceiling B has set.

What a few weeks empty costs

Say the owner wants to list at $2,600 instead, hoping someone will take it.

At $2,600, the condo brings in $125 more a month than at $2,475, or $1,500 over a year. But each week empty at $2,600 costs about $600 in rent. If the higher price takes three extra weeks to find a tenant, that’s about $1,800 lost before the first month’s rent comes in, more than the year’s extra rent, and B suggests it could take longer than that.

A home priced to rent quickly also tends to draw more applicants, which makes it easier to choose a good tenant rather than the only one.

When to adjust

Set a check-in before you list. If after about a week to ten days there have been few inquiries or showings, look at the price first, then the photos and the listing itself. When you adjust, move by a meaningful amount, such as $50 to $75, rather than $10 at a time over several weeks. A listing that keeps dropping slowly starts to look like something is wrong with the home.

The time of year makes a difference too. In many markets, more people move in the spring and summer, so a home available in August can usually hold its price better than one available in January.

Writing it down

Keep the worksheet with the listing. When the owner asks why the rent is $2,475, the comparables and the adjustments answer it in a minute, and next year you can start from the same homes. How to write a rental listing that gets the right inquiries covers the next step, turning the home into a listing that renters at that price will respond to.