A big mistake new landlords in Bloomingdale make is not taking time to learn how to calculate their property’s fair market rental rate. Because of this, so many rental property owners under- or overestimate the rent they should be charging and end up losing money every month. This is especially true as rents continue to rise across the country. You leave money on the table when you do not increase your monthly rent to keep abreast with the market. Knowing how to correctly raise rents is equally important, especially when your property is occupied. While good advice on how to do it is abundant, the most important tool you have to understand and use is the rental property assessment.
Fair Market Rent
The usual rental rate at which a similar property in your area is going for is called the fair market rent. Since the market rent is not the same for every neighborhood, you need specific and local numbers to calculate correctly.
For a Bloomingdale property, you can begin with what other landlords in your 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 needed to get this information. You can begin by checking out posted rentals in your area or the local classified ads.
You can also connect with a Bloomingdale property management company like Real Property Management Washington DC for a host of information about the rental market. When you have three or more comps in hand, you can start calculating the average monthly rent and compare the result with your current rate. This would then be the fair market rent for your property.
Regular Rental Property Assessment
Calculating the fair market rent is a necessary first step. However, it is only the beginning of ensuring your rental property’s profitability. For you to maximize your monthly cash flows, you must re-calculate the fair market rent for your Bloomingdale property annually, or even more often, if rents are volatile. The shortage of single-family rental homes is driving the soaring rental rates in markets all over the country. If you have not assessed your rental property recently, you might be charging too low and missing out on monthly income opportunities.
Still, it’s not just about money. Property owners have various reasons for not raising their rent. Perhaps you worry that your rental property will be harder to lease if you raise your rent. Other landlords believe that setting the rent at the going rate will make it harder to find tenants as their rental house would seem less competitive. If your property is occupied, you might be afraid of angering your tenant who has been renting from you for a while. But you have to consider that if you haven’t changed your rent for a few years, chances are your current tenant is paying a rental rate much lower than what others are paying.
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 a lot of market research, you might still hesitate to raise your rent for fear of losing your tenant. This is where a professional property management company can help by assessing your property and setting your rental rate. The cost of hiring a property manager hinders many landlords. But if you are charging lower than the usual amount of rent, you are already losing more money compared to paying someone to manage the property for you. By making sure you have an accurate rental rate and a good working relationship with your tenants, a professional property management company can actually help increase your monthly income, thereby paying for itself.
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