A big mistake new landlords in South End make is not taking time to learn how to calculate their property’s fair market rental rate. This results in many rental property owners over-or undercharging rent and losing money each month. 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. However, when you have an occupied property, knowing how to raise rents the correct way becomes especially important. The most important tool you need to master is the rental property assessment. There is also a lot of good advice on how to do it.
Fair Market Rent
The fair market rent of a property is the usual rate at which similar properties are being rented out in your area. The market rent differs from one neighborhood to the next so you really need specific and local numbers to calculate your own correctly.
For a South End property, you can start by knowing what other landlords in the area are charging their tenants. Looking at comparable properties, or comps can also ensure that the other rental properties have similar sizes and features to yours. Some detective work is required to get this information. A good place to start would be posted rentals and the local classifieds.
You can also connect with a South End property management company like Real Property Management Commonwealth for a host of information about the rental market. As soon as you have around three comps in hand, you can now start calculating the average monthly rent, comparing your current rate with the result. This would then be the fair market rent for your property.
Regular Rental Property Assessment
After you have calculated the fair market rent, you can now think of how to keep your rental property profitable. You have to re-calculate the fair market rent for your South End property at least once a year to maximize your monthly cash flows. If rents in your area tend to fluctuate, you might need to recalculate more often. The shortage of single-family rental homes has caused a surge in rental rates in most markets across the country. You might be charging too low and missing out on additional income every month if you haven’t done a recent rental property assessment in your area.
But it’s not only about the money. Many property owners hesitate to increase their rent for various reasons. Some worry that higher rent will make their rental property harder to lease. Other landlords do not want to set their rent at the going rate thinking that their rental house will no longer be competitive, leading to trouble finding tenants. Or they might not want to anger a current tenant who has been renting from them for a while. Of course, if you haven’t increased your rent in the past years, your current tenant is likely to be paying way below the rental rate others are paying.
Professional Property Management Pays for Itself
It can be time-consuming, and even nerve-wracking, figuring out the correct amount in rent to charge. Even with intensive market research, you may still be concerned that raising your rent will cost you your tenant. This is where a professional property management company can help by assessing your property and setting your rental rate. Landlords often forego hiring a property manager thinking it is costly. 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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