Part of the biggest mistakes that newly-started or do-it-yourself landlords in Spring make most of the time is not grasping how to calculate a fair market rental rate for their property properly. As a consequence, plenty of rental property owners are under-or overestimating how much rent they could be asking for and losing money every month as a consequence. This is mainly true as rents continue to rise across the country. If you are not increasing your monthly rent to keep up with the market, you leave money on the table. Naturally, being aware of how to correctly raise rents, specifically when you have an occupied property, is vital. Even though there are lots of useful tips on how to do it, the first and most important tool you have to know and take advantage of is the rental property assessment.
Fair Market Rent
The fair market rent of a property is the rate at which similar properties are renting for in your area. The market rent changes generally from place to place and indeed from one neighborhood to the next, so there are no shortcuts: you need specific and local numbers to calculate correctly.
For a Spring property, the most significant piece of information you ought to get your hands to begin with is what other landlords in your community are charging their tenants. You, furthermore, have to look at comparable properties, or comps, to make certain that the other rental properties are a match in size and features to yours. To get this important information, you’ll need to do quite a bit of detective work. Check out posted rentals in your neighborhood and those advertised in local classifieds.
Or, call a Spring property management company like Real Property Management Heritage, which will have a wealth of information with respect to the rental market. With at least three or more comps in hand, calculate the average monthly rent and compare your current rate with the calculation. You now have the fair market rent for your property!
Regular Rental Property Assessment
Even though calculating the fair market rent is a significant first move, it is only the initial move in keeping your rental property profitable. To maximize your monthly cash flows, it’s essential to re-calculate the fair market rent for your Spring property at least once a year, maybe even more often, if rents are changing swiftly. In the past few years, a shortage of single-family rental homes has led to rapid increases in rental rates in a lot of markets across the country. If you have not presently executed a rental property assessment in your place, possibilities are your rent is too low, and you are missing out on income every month.
On the other hand, it’s not only about the money. There are several other considerations why property owners hold back on raising their rent. You may probably be troubled that raising your rent will make your rental property harder to lease. A lot of landlords are afraid that if the rent is set at the going rate, their rental house won’t be competitive, and they’ll have trouble finding tenants. Or probably you are anxious about angering a current tenant, particularly if they have been renting from you for a while. Obviously, if your rents haven’t changed for several years, there’s a good chance that your current tenant is paying a rental rate that is well below what everyone else is paying.
Professional Property Management Pays for Itself
It can be time-consuming and, let’s face it, rather nerve-wracking, to find out whether you are charging the correct amount in rent. Even after executing your own market research, you may still have fears about raising your rent without losing your tenant. For all of these reasons, having a professional property management company to assess your property and set your rental rate may be the alternative option you’ve been wanting. Landlords at times keep back from hiring a property manager because of the cost. But actually, if you are not charging the right amount of rent, you are already losing far more money than you’d pay someone to manage your property for you. By securing you have an accurate rental rate and working carefully with your tenants, a professional property management company can actually help you increase your monthly income and, eventually, pay for itself.
Would you like to know more about what a professional property management company has to offer? Contact us online today or give us a call at 832-449-5263.
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