Many new or do-it-yourself landlords in Lakeview often make the mistake of not knowing how to calculate a fair market rental rate for their property. Because of this, many rental property owners under- or overestimate how much rent they could charge and end up losing money as a result. This is especially true as rents continue to rise across the country. If you do not increase your monthly rent to keep up with the market, you are making an unsound decision. When your property is occupied, however, it becomes imperative that you know how to correctly raise rents. 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 the rate at which similar properties are renting for in your area. There are no shortcuts and you need to have the specific and local numbers to calculate for the market rent since it can be very different from one neighborhood to the next.
You can figure out a Lakeview property’s rate by knowing what other landlords in your area are charging their tenants. You will also need to look at comparable properties, or comps, to make sure that the other rental properties are similarly sized & furnished to yours. You need some investigation to get this information. The local classified ads and posted rentals within your area will be a good place to start.
You can also contact a Lakeview property management company like Real Property Management Chicago Edge for a ton 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. You now know 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. To get maximum monthly cash flows, you need to re-calculate the fair market rent for your Lakeview property at least once every year, or if rents are volatile, even more frequently. The recent shortage of single-family rental homes has caused a sharp increase in rental rates in different markets across 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. There are numerous reasons that make property owners hesitant about raising their rent. 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 are reasonably worried about angering a current tenant who has been renting from them for a while. Still, if you have not changed your rents for a few years, your current tenant could be paying way below the rental rate everyone else is paying.
Professional Property Management Pays for Itself
It can be time-consuming and a bit nerve-wracking to figure out if you are charging the correct amount in rent or not. Even after extensive market research, you might still be concerned about raising your rent without getting on your tenant’s bad side. For these reasons, it is helpful to have a professional property management company assess your property and set your rental rates. The cost of hiring a property manager hinders some landlords from doing so. But compared to the money you are losing from not charging the right amount of rent, paying someone to manage your property might not be so expensive after all. By giving you accurate rental rates and working pleasantly with your tenants, a professional property management company can help you increase your monthly income, therefore paying for itself.
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