A big mistake new landlords in Three Forks 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. 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 usual rate at which similar properties are being rented out 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.
For a Three Forks property, you can start by knowing what other landlords in the 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. To get this information, you need some detective skills. A good place to start would be posted rentals and the local classifieds.
As an alternative, you can get in touch with a Three Forks property management company like Real Property Management Bozeman who will know a great deal 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 have 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 Three Forks property at least once every year, or if rents are volatile, even more frequently. The recent shortage of single-family rental homes has caused rental rates in many markets to skyrocket. If you have not assessed your rental property recently, you might be charging too low and missing out on monthly income opportunities.
Still, it is not only about the money. Property owners may be hesitant to raise their rent for a lot of different reasons. Some are worried that higher rent will make the rental property harder to lease. 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. But, if your rents have not been updated for a few years, it is very likely that your current tenant is paying a rental rate much lower than the usual rate other tenants are paying.
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 having done your own market research, you could still be concerned about losing your tenant if you raise your rent. 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 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 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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