How much should I rent my house for?

A common misconception we see with our clients is seeing them a desire for top-dollar rent. If demand for top-dollar causes the property to be vacant, however, this can result in less profit.

In order to help you explore the best rent price for your rental, we created a vacancy vs. rent reduction calculator. With this tool, you can assess the income difference between renting your property at a higher rate with a longer vacancy or a reduced rent with a shorter vacancy. 

Vacancy vs. Rent Reduction Calculator

Find the optimal price to minimize vacancy and maximize total lease income.

Scenario 1: Higher Rent

Scenario 2: Reduced Rent

Lease Term

Interested in learning how much your property will rent for?

Understanding Rental Property Rates

Setting the right rental property rates is an important part of managing a successful rental property, especially in a competitive market like Orange County, California. Whether you’re a first-time landlord or you have multiple properties across California, pricing your property correctly can help you attract high-quality tenants, minimize vacancy periods, and maximize your investment returns.

In this article, we’ll discuss the average rent in Orange County, different methods to set rental rates, and the various factors that impact setting rental prices.

Average Rent in Orange County

Orange County, with its desirable coastal location, vibrant communities, and proximity to major attractions like Disneyland and beautiful beaches, has consistently ranked among the higher rent markets in California. 

Taking into account recent data from Zumper and our own databases, here’s a snapshot of the average rent across different property types in Orange County:

  • Studio apartments: $1,800 – $2,400 per month
  • 1-bedroom apartments: $2,200 – $2,800 per month
  • 2-bedroom apartments: $2,800 – $3,500 per month
  • 3-bedroom houses: $3,500 – $5,000 per month
  • Luxury properties: $6,000+ per month
It’s important to note that these are averages and rent prices can vary significantly based on factors such as location, property size, condition, and amenities.

Ways to Set Rental Property Rates

There are several ways to determine your rental property rates, each with its own benefits and considerations. Here are the most common approaches:

1. Market Comparison (Comparable Market Analysis - CMA)

The best method for setting rent is by comparing your property to similar rental units in the same area that have rented. If you can’t get access to data that covers what properties are rented for, the next best method is to analyze properties that are still on the market. These methods are known as a Comparative Market Analysis (CMA), and to do it effectively, you need to look at three factors:

  • Rental properties with similar square footage, number of bedrooms, and amenities.
  • The property’s location, including proximity to schools, shopping, public transportation, and major employers.
  • The age and condition of the property.

By analyzing properties in your area with similar characteristics, you can set a competitive price that will attract tenants and give you a good return on your investment.

Not sure where to start? You can look at similar properties and what they rented for on Zillow’s Price My Rental—it will show you properties that have rented recently and also properties that are currently on the market.

You must remember that comparing rental rates is part art, part science—use your judgement to ensure you’re comparing apples to apples, not oranges to zebras.

2. Cost-Based Pricing

Cost-based pricing involves determining the total cost of owning and maintaining the property and setting rent accordingly. For this method to work, you need to get a clear picture of your fixed and variable costs, including:

  • Mortgage payments (if applicable)
  • Property taxes
    Insurance
  • Maintenance costs
  • Utilities (if included)
Once you’ve calculated all of your ongoing expenses, you can set the rent at a level that covers these costs and generates the profit you’re aiming for. However, this approach should be combined with a comparative market analysis. A cost analysis is great for determining what you need but alone it won’t be able to tell you what you can get. If you use cost-based pricing without taking the market into consideration, you run the risk of overpricing your property and having it sit vacant.

3. Rent Analysis Calculator

Our Free Instant Rent Estimator is a quick and easy way to get a professional rent estimate for your property. It provides you with a valuable estimate of the fair market rent for your Orange County rental property taking into account location, property condition, rental demand, rental history, competition, and seasonal factors.

4. Rent Control or Rent Stabilization

Some areas within Orange County—like Santa Ana and Anaheim—may have rent control laws in place. These laws limit how much you can increase the rent for tenants, particularly if they’ve lived in the unit for a long time. It’s essential to be aware of these local ordinances so that you can stay company when setting your rental rates.

How to Calculate Cap Rate on Rental Property

The cap rate, or capitalization rate, is a key metric for assessing the potential profitability of a rental property. It helps investors determine the expected rate of return on their property investment based on income and expenses. While cap rates can be helpful, they are best for apartment buildings and are not a good analysis for single family homes. 

To calculate the cap rate, you need to know the property’s net operating income (NOI) and its current market value or purchase price. The formula for cap rate is:

Cap Rate Percentage Equation
Let’s break down the three steps involved in calculating cap rate for your rental property.

Step 1: Calculate Net Operating Income (NOI)

Net Operating Income is the total income generated by the property (usually rent) minus all operating expenses (maintenance, management fees, insurance, taxes, etc.).
NOI = Revenue − Operating Expenses
For example, if your annual rental income is $36,000 and your annual operating expenses are $12,000, your NOI would be:
36,000 − 12,000 = 24,000

So, the Net Operating Income (NOI) of the property is $24,000.

Step 2: Find the Property Value or Purchase Price

The property value is either the current market value of the property or the purchase price if you recently acquired the property. For example, if the market value of your property is $400,000, you would use this figure in the calculation.

Step 3: Calculate the Cap Rate

Now that you have both the NOI and the property value, plug these numbers into the formula:
Cap Rate = (400,000/24,000​) × 100 = 6%
This means that the property is generating a 6% return on investment based on the current market value and the NOI. Generally, a cap rate between 4% and 10% is considered normal for rental properties, though this can vary depending on the location and type of property.

Key Factors to Consider When Calculating Rent for Your Rental Property

When setting your rental property rates, it’s important to account for several factors that can significantly impact whether your property is quickly leased or stays on the market for too long. These factors go beyond simple square footage and rent comparisons and get into things that influence market demand and the perceived value of the property.

1. Location, Location, Location

In real estate, location is often considered the most important factor influencing property value—and rental rates are no exception. The area where your property is located can greatly impact its appeal to prospective tenants. Key considerations include:

  • Proximity to amenities: Being close to schools, shopping centers, parks, public transportation, and entertainment options can increase the rental value of your property. In Orange County, proximity to beaches, attractions like Disneyland, or major employers like tech companies and hospitals can also boost demand.
  • Neighborhood desirability: Not all neighborhoods are built equally—or at least, they aren’t seen as equal. In-demand neighborhoods usually have good reputations for things like low crime rates and access to highly ranked schools. Areas like Irvine, Newport Beach, and Laguna Beach often go for higher rents due to their premium status and high-quality amenities.
  • Commute time and access: The ease of access to major highways or public transportation hubs can be a major factor for tenants, especially in urbanized areas. Properties near key transit routes or in areas with low traffic congestion are often more attractive to renters.

2. Size and Layout of the Rental Property

The size of the rental property directly affects the rental rate, with larger units generally costing more. But, it’s not just about square footage—the layout and functionality of the space can also play a significant role.

  • Number of bedrooms and bathrooms: Typically, the more bedrooms and bathrooms your property has, the higher the rent. A three-bedroom home will usually rent for more than a one-bedroom unit, but it’s important to align this with local market trends to avoid overpricing.
  • Open floor plans vs. divided spaces: Modern tenants tend to gravitate towards open floor plans that make spaces feel larger and more connected. Homes with updated, functional layouts can usually charge higher rent than those with outdated or less efficient designs.
  • Extra space: Additional features like a den, home office, garage, or outdoor living spaces can add significant value to the property. These amenities can increase the rental price.

3. Property Condition and Age

The overall condition and age of your property will also impact the rental price. If you recently renovated or have a particularly well-maintained property, you can often charge a higher rent than a more out-dated property. 

Newer properties or those recently renovated often feature modern appliances, energy-efficient systems, and updated interiors, which justify a higher rent. Older properties may need to be priced more competitively unless they have undergone significant renovations.

A property that is well-maintained and clean will always attract higher-paying tenants. Regular maintenance, such as fixing leaky faucets, painting walls, and replacing broken appliances, will keep the property in good condition and support a premium rental price.

4. Amenities and Features

Tenants often look for specific amenities when searching for a rental property, and these can significantly impact the rent you can charge. Common amenities that add value to your rental property include:

  • Upgraded kitchen and appliances: Stainless steel appliances, granite countertops, or modern kitchen fixtures can make a property more appealing and justify a higher rent.
    In-unit laundry: A washer and dryer inside the unit—or at least on-site—is a major convenience for tenants.
  • Air conditioning and heating: In a climate like Southern California’s, air conditioning is almost a must-have in many areas, especially during the summer months. Properties with central heating and cooling systems typically rent for more than those with window units or no air conditioning at all.
  • Parking: Adequate parking can be a major selling point. Many tenants are willing to pay a premium for parking, especially in crowded urban areas or for multi-family properties.
    Pet-friendly policies: If your property is pet-friendly, you can often charge a premium rent, especially in a market where many renters own pets.

5. Market Conditions and Seasonal Demand

Rental demand tends to peak during certain times of the year, with the spring and summer months generally seeing higher activity due to moving schedules. During these months, you may have more flexibility to increase rent, while you may need to reduce the asking price in the winter to attract tenants. 

Employment growth, new businesses opening in the area, or population growth can also drive up rental demand. Conversely, areas with high vacancy rates or economic downturns may require lower rental rates to attract tenants.

6. Competitive Market

You should always keep an eye on the competition. If other landlords in your area are offering similar properties with comparable amenities, you may need to price your property competitively to attract tenants. However, be cautious about underpricing; setting rent too low could leave money on the table, especially if there’s strong demand in your neighborhood.

How A Professional Property Management Company Can Help Set Your Rental Rate

Setting the right rental property rates is a delicate balance between covering your expenses, staying competitive in the local market, and ensuring a healthy return on your investment. By considering the average rent in Orange County, using market comparison or cost-based methods, and calculating your cap rate, you can price your rental property effectively.

Remember, pricing is not static—they should be regularly reviewed and adjusted based on changes in the market and property performance. By staying informed and flexible, you can set a rental rate that balances profitability with tenant satisfaction, helping you maximize the potential of your property in Orange County’s dynamic rental market. Working with a professional property management company can help you set a fair market rent that is attractive to tenants and delivers a profitable return on your investment.

At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life. 

Schedule a call to speak with one of our Good Life experts.

Rental Rates FAQs

What factors should I consider when setting rental rates for my property in Orange County?

When setting rental rates in Orange County, consider factors like location, property size, condition, and amenities as well as location in relation to desirable areas, neighborhood desirability, and special features of the property like ungraded kitchens or air conditioning.

How can I calculate the right rent for my rental property without overpricing it?

There are many ways to calculate a rental rate but by comparing your property to other comparable properties on the market, taking into account factors like size, location, and amenities, is the best way to avoid overpricing.

What is the difference between market comparison pricing and cost-based pricing for rental properties?

Market comparison pricing sets rent based on similar properties in your area, ensuring competitiveness. Cost-based pricing sets rent based on your expenses (mortgage, maintenance) and desired profit, ensuring your costs are covered. Both methods have pros and cons, but market-based is more flexible and ensures you stay competitive.

Give us a call for a free consultation!

Our team is ready to help with your property management needs. 

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Chloe Slater

DRE #02161657

Adam Manly

DRE #01953442

Business Development Managers