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Posted at 05:30 AM ET, 06/12/2012

For rent by owner: Deciding how much rent to charge

I have no illusions about this apartment that I’m trying to rent out. It cannot compete with the large apartments with modern amenities in the West End or a marbled two-level apartment in a manse in Kalorama.

It has an early 1990s kitchen with Formica countertops, bland, if inoffensive, oak cabinets and utilitarian appliances. The bathrooms have not been updated; replacement of the fixtures has left them looking a bit hodge-podge. There are simply some apartments that are out of my league.     

My apartment, however, has qualities to sell itself. It is clearly a step above the English basements and cramped two bedrooms which — read the fine print — are really one bedroom plus den.

 I know well enough that English basements, while perfectly livable, have a natural disadvantage, in that, a large segment of potential tenants do not feel safe being at ground level or don’t like that someone can look in their home from the street. That makes my second floor walk-up much more appealing to a large segment of potential renters.

A two-bedroom, one-bathroom apartment presents problems for roommates. Sharing a bathroom and needing to take a shower at the same time is the death blow to many a roommate relationship. So my apartment’s two bathrooms are another plus-factor.     

And, of course, the old adage about real estate and location holds true for rentals as well. My apartment has that in spades, being only one block from Connecticut Avenue and four blocks to the Metro station.  While in the past, U Street, Logan Circle and even Columbia Heights could be passed off as “Dupont Circle,” in the age of Google maps, the dividing line between these neighborhoods and Dupont Circle proper have become starker and harder to disguise.

But Dupont Circle can have its drawbacks as well. First and foremost, did I mention that my apartment has no parking space? Finding a parking space in the evening is next to impossible. When I lived there and owned a car (and cursed the patrons of Lauriol Plaza every night while I circled for blocks looking for a legal space), I doubt there are many who would have the fortitude to own a car on that street now. In earlier days, the only remedy was to cite the availability of parking rental spaces at a nearby hotel. Today, I can minimize the problem by spotlighting the walk score (“97 out of 100!”) and proximity to the Metro (“four blocks!”) and to a Zipcar (“right behind the apartment!”). Lack of parking is now a green selling point.

But, irreducibly, the question of what an apartment is worth comes down to what price a renter is willing to pay. I use Craigslist as a blunt instrument to rank order all the two-bedroom apartments on the market in Dupont Circle from lowest rent to highest rent. Then, running my finger down the list, I find the first one that sounds remotely comparable to mine.

Some are too different to compare: Logan Circle (too far away) or a doorman building. When I do find a comparable, I can equalize the rent values by calculating a price per square foot rent and multiplying it by my apartment’s square footage. I refine this figure by adding or subtracting rent as though I am choosing from a menu of items. Only one bathroom, add $300 to the rent. A parking space? That’s minus $250 from the comparable rent. What is an extra 10-minute walk to the Metro worth? About $400 on my menu. Repeat as necessary.        

The job is not complete without scanning all the available pictures of the competing apartments (which most Craigslist listings conveniently provide). I have come to be brutally honest — just as a renter would be — in asking myself whether I would rather live in that shinier new place with a gourmet kitchen in Adams Morgan or in my older, better located place. When the evaluation is complete, my apartment has found its place in the rank order on Craigslist, right around $3,100 per month.

The final step is for my peace of mind. I knock roughly 10 per cent off the rent so I’ll be sure to get broader exposure to potential renters. I know that I would gladly fork over the extra few hundred dollars I could make if I could find the right tenant who isn’t going to move out after one year, who doesn’t hold parties every weekend on the rooftop deck, or who doesn’t need a reminder to pay rent. Three hundred dollars? That’s a fair price for a good night’s sleep.  

Read the first For Rent By Owner

A Colorado-based lawyer, Douglas Hsiao has rented out his Dupont Circle condo for 18 years. In his occasional column, he details his search for a new tenant.

By Douglas Hsiao  |  05:30 AM ET, 06/12/2012

Tags:  landlord

 
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