One big mistake of new landlords in New Bedford is not knowing how to calculate a 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. Of course, you must know how to raise rents the correct way, especially when you have an occupied property. 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. Since the market rent differs for each neighborhood, you will need specific and local numbers in order to calculate correctly.
For a New Bedford property, you first need to find out what the other landlords in your locality 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 will need to do some sleuthing to get this information. The local classified ads and posted rentals within your area will be a good place to start.
Or, get in touch with a New Bedford property management outfit like Real Property Management Success, who would have a lot 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. You now know the fair market rent for your property.
Regular Rental Property Assessment
Once you have calculated the fair market rent, the next step is to keep your rental property profitable. To get maximum monthly cash flows, you need to re-calculate the fair market rent for your New Bedford 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 could be missing out on additional income each month if you have not done a rental property assessment in your area recently.
Still, it is not only about the money. Property owners have various reasons for not raising their rent. You could be worried that your rental property will be much harder to lease out if your rent is higher. Some landlords fear that if they set their rent at the going rate, their rental house will become less competitive, and they will have trouble finding tenants. If your property is occupied, you might be afraid of angering your tenant who has been renting from you for a while. Of course, if your rent has stayed the same for a few years, there is a good chance your tenant is paying way below the usual rental rate for your area.
Professional Property Management Pays for Itself
Knowing if you are charging the correct amount in rent or not can be time-consuming and nerve-wracking. Even after all your market research, you might still be wary about raising your rent without losing your tenant. That is why having a professional property management company can be helpful in assessing your property and setting your rental rate. The cost of hiring a property manager hinders many landlords. But, considering that you are not charging the right amount of rent, you are actually already losing more money than you would pay someone to manage your 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 help increase your monthly income, thereby paying 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 908-239-7579.
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