Of all the landlord tasks, rental property pricing is the most important. Picking the right rent rate will affect if you get tenants and how much money you can make. The wrong price can drive potential renters away or give you poor profit margins.
Finding the right price can be tricky, especially for new landlords. It can be confusing to know where to start and if you've made the right choice.
There is a lot of confusion around getting a rental valuation and what that means for your pricing model. Check out these myths too many landlords believe that mess up their rates.
1. Property Values Always Stay the Same
You really can't set rental pricing until you know the property value. It helps determine what's fair to ask for. And also helps you make sure you're covering your costs with the set price as well.
However many landlords think they only need to get a valuation one time when they first buy the property.
That's not the case at all! Landlords need to be getting updated property values regularly. Every couple of years is a good rule of thumb for making sure you have the most accurate numbers. This figure is one of the main factors for setting rent prices, so you want to stay on top of it.
2. Rent Amount Can Change Whenever
Some landlords don't take the time to find the right price because they believe they can make a rent increase whenever they want. So if they get it too low, that's fine they can just raise it in a couple of months. This is definitely not true and you have to be careful to follow the local law!
The specifics vary by state. But no matter where you are you have to give some notice to your tenants before chaining the rent. It's much easier to just get the price right the first time with a rental valuation.
3. Fees Can't Be Added for Special Cases
Having a set rent amount is important for finding tenants. This helps you get more good candidates who can afford to stay there. But deciding on that price doesn't mean it's going to be the same for every tenant.
It's a good idea to have some fee policies in place for special cases with tenants. This could be for children or pets living in the rental. An added fee just makes sure you're covered for the chance of excess damage. Knowing what these fees are going to be ahead of listing is key.
Myths About Rental Valuation to Ignore
There is a lot of mystery surrounding rental valuations and setting prices. All that confusion can keep landlords from getting their pricing right. And that means losing money.
Working with a property management team can help you avoid the common mistakes DIY landlords make. You can get expert advice and access to resources that will help you be successful.
At PMI Mecklenburg, our team is driven to help landlords through every step of the rental process. We've been serving the Charlotte area for more than 20 years. If you're interested in seeing how we can help, get a free rental analysis today!
