One big mistake of new landlords in Daly City is not knowing how to calculate a property’s fair market rental rate. This is the reason why a lot of property owners are losing money monthly by under- or overestimating how much rent to ask for. This is especially true as rents continue to rise across the country. If you don’t want to leave money on the table, you have to increase your monthly rent to keep up with the market. When your property is occupied, however, it becomes imperative that you know how to correctly raise rents. The most important tool you need to master is the rental property assessment. There is also a lot of good advice on how to do it.
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 Daly City property, you can begin with what other landlords in your area are charging their tenants. Comparable properties, or comps, are similarly sized rental properties that you have to look at with features akin to yours. You need some investigation to get this information. Posted rentals and local classified ads are good places to start.
You can also connect with a Daly City property management company like Real Property Management Mid Peninsula for a host of information about the rental market. When you have at least three comps, calculate the average monthly rent and compare your current rate with the result. This would be the fair market rent for your property.
Regular Rental Property Assessment
Calculating the fair market rent is an essential step, it is just the first step in ensuring your rental property is profitable. If you want to maximize your monthly cash flows, you have to re-calculate the fair market rent for your Daly City property at least once a year, or more frequently if rents change very quickly. 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 too low and missing out on additional income every month if you haven’t done a recent rental property assessment in your area.
But it’s not only about the money. Property owners have various reasons for not raising their rent. Some worry that higher rent will make their rental property harder to lease. Other landlords fear that setting the rent at the going rate will make their rental house less competitive, leading to fewer tenants. Or they are reasonably worried about angering a current tenant who has been renting from them for a while. Of course, if you haven’t increased your rent in the past years, your current tenant is likely to be paying way below the rental rate others are 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 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. Some landlords balk at the cost of hiring a property manager. But if you are not charging the right amount of rent, you might already be losing more money than if you were paying someone to manage your property for you. Professional property management companies can help you increase your monthly income, and in that way pay for itself, by ensuring you have an accurate rental rate and by maintaining a good relationship with your tenants.
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 650-696-1800.
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