One major mistake that new landlords make is to forego learning how to calculate a fair market rental rate for their property. This results in rental property owners losing money every month because of under-or overestimating how much rent they could be asking for. This is especially true as rents continue to rise across the country. If you don’t want to leave money on the table, you have to increase your monthly rent to keep up with the market. Of course, you must know how to raise rents the correct way, especially when you have an occupied property. There is a lot of good advice on how to do it, but one of the most important tools you need to master and use is rental property assessment.
Fair Market Rent
The fair market rent of a property is what similar properties that are nearby are renting for. This value varies from one neighborhood to the next so you really need specific and local numbers to calculate the market rent correctly.
For a Brandon property, you can begin with what other landlords in your area are charging their tenants. You also have to look at comps, or comparable properties, to ensure that the rental properties you have identified are similar in features to yours. You will need to do some sleuthing to get this information. Posted rentals and local classified ads are good places to start.
Or, get in touch with a Brandon property management outfit like Real Property Management Empire, who would have a lot of information about the rental market. Three or more comps are needed so you can calculate the average monthly rent and compare your current rate with the result. This would then be the fair market rent for your property.
Regular Rental Property Assessment
Calculating the fair market rent is an essential step, it is just the first step in ensuring your rental property is profitable. For you to maximize your monthly cash flows, you must re-calculate the fair market rent for your Brandon property annually, or even more often, if rents are volatile. In the few years that have passed, a shortage of single-family rental homes has led to a surge in rental rates in almost all markets all over the country. You might be charging a lower rent, especially if you have not recently done a rental property assessment, causing you to miss out on additional monthly income.
Still, it is not only about the money. Property owners hesitate to raise their rent for many other reasons. You could be worried that your rental property will be much harder to lease out if your rent is higher. Still, other landlords are afraid to set their rent at the going rate thinking their rental house won’t be competitive, and they’ll have trouble finding tenants. Or they are reasonably worried about angering a current tenant who has been renting from them for a while. Of course, if your rent has stayed the same for a few years, there is a good chance your tenant is paying way below the usual rental rate for your area.
Professional Property Management Pays for Itself
Knowing whether you are charging the appropriate amount in rent or not can be both time-consuming and nerve-wracking. Even with intensive market research, you may still be concerned that raising your rent will cost you your tenant. Hence, having a professional property management company assess your property and set your rental rate could be your best option. One thing that hinders a landlord from hiring a property manager is the cost. But when you consider that you are losing more money by not charging the right amount of rent, paying someone to manage your property now seems a good deal. Professional property management companies can help you increase your monthly income, and in that way pay for itself, by ensuring you have an accurate rental rate and by maintaining a good relationship with your tenants.
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