I would like to share with you how to price a room for rent for a so that you can optimize your cash flow while remaining competitive so that you are getting and keeping good residents. You want to price fair enough so that you are getting enough to be profitable, as well as being competitive so that you are a good value in rental homes.

The first thing to look for is other local ads that may have rooms to rent. Some may call them sleeping rooms or room rentals. Find out how they are priced and what it includes. You may even want to visit a few just to see what they offer. I would recommend visiting at least three to get a good judgment and comparison. This way you can see what a value you can offer so that they are getting the best deal possible and your rentals are the best price around.

If you evaluate other properties, write down everything. How much are they are charging for rent? What do they offer their residents? How much they are asking for a deposit? What kind of lease they have? Do they offer a weekly rates or only monthly rates?

By answering these questions you can find the quickest way to be the best value around. Weigh out each property and see what you get. Maybe you can offer one more thing that the competitors, like wireless internet. Maybe get a used washer and dryer to provide on-site free laundry. When you find out what others charge and what they are giving, go one better and set your price. You can do this by either charge a little less for the same or offer a little more (amenities) and don't charge any more than your competitor. This will ensure that you are the one they go with. You may just offer a weekly rate where others do not and you will win the residents over. The weekly rate is sometimes much easier for residents to come up with than a larger monthly rate that can seem a little overwhelming for a new resident trying to start over. The deposit amount is much less for a weekly rental homes as well which makes getting a room most affordable for many residents.

If you do not have any competitors to look to that are renting rooms, look to a one bedroom apartment rental. What do they charge and what do they get for the money? Go about $50-$100 less and try that price out to see what kind of resident that produces. Every area is different and you can charge varying rates according to what the rent goes for in that area.

You also want to add up your complete cost per month for your property. Add up the mortgage or rent payment, taxes, insurance, water, sewage, garbage, electric, heating fuel, wireless internet and cable if you provide it. Make sure you have set up all of your bills on a budget plan so that you are paying a consistent amount on each of your bills. Add all that up and take it times twelve. That will give you your yearly cost. (Example: Mortgage-including taxes and insurance $750.00, water $45.00, sewage $15.00, garbage, $15.00, electric $95.00, heating fuel $120, internet and cable costs $60.00. Total monthly cost = $1,100.00 x 12 = $13,200.00 total yearly cost to you as the homeowner/renter). Now divide that by the total weeks in the year, $13,200.00/52 =$253.85. This is the cost you need to clear every week before making any profit. If that is the case and you have 5 rooms that you rent out at $100.00 a week each, you will make a profit of $12,800.00 per year or $1,066.67 monthly profits which is a pretty nice cash flow on a single family home as long as there is no vacancy. (5 rooms x $100.00 (weekly rent) = $500.00 (fully occupied) x 52 (weeks in a year) = $26,000.00 (yearly revenue). Take your yearly revenue and subtract your yearly cost (calculated above) and it gives you your yearly profit of $12,800.00. Divide that by twelve and you get your monthly profits (as calculated above.)

You may want to make sure your upfront cost to the new resident include a deposit, first weeks' rent and a processing fee to do background checks. For the most part, when you are renting out rooms it is good to get a deposit of two weeks' worth of rent for any damages if a resident does not work out and moves out or gets evicted rental homes.