The old saying goes, "Don't judge a book by its cover." What if you're investing in that book? What if you gave its author money to help get it published? You'd want to know how much it could make you before you invest.
Property investors have the same struggle. They also need a way to know if a property is worthwhile before they start throwing money around.
Read on to learn the myths landlords might believe about rental valuation and how to protect yourself from them.
I Don't Need a Rental Valuation or Analysis
Get a professional rental analysis. It assesses your property's rental market value using factors such as:
- Purchase price
- Down payment
- Interest rate and term
- Capital expenditure
- Estimated closing costs
You'll also need to use rental valuation methods to make sure it stays competitive. Examples include:
- Sales comparison approach
- Capital asset pricing model
- Income approach
- Gross rent multiplier
- Cost approach
These strategies help you get the best ROI on your investment. They're also not a one-and-done deal because the market constantly changes.
I Can Raise the Rent Whenever
Rent in Merced has gone up 35.3% since the pandemic. Working to increase your property's value is important, but don't forget to think in the here and now. Don't assume you can always offset a poor investment by raising the rent later.
There are statewide regulations about when you can raise the rent and by how much. The rules also state that you must notify your tenants of higher rent.
Unexplained increases can also be a poor business move that leads to more vacancies. You'll have trouble attracting tenants if the rent is prohibitively high or suspiciously low for the area and property value.
Get a rental valuation to find a fair rental rate and expect to stick close to it. Upgrades to the property or changes in the market may allow for a legal, reasonable increase.
I Know My Property's Value Best
Do you know what your property is worth? Many landlords believe they do better than anyone else. That rental valuation myth often sets them into believing all the others.
The truth is there are professionals who know your property's value better than you do. Talk to a professional realtor in CA for a better idea. Part of a property manager's job is to understand the market and help investors set the best rental price.
Getting an Easy Rental Valuation Isn't a Myth
The main myth landlords believe about rental valuation is that they don't need it. They may assume they know the value of their property better than anyone. This can lead them to believe other harmful myths, such as that they can raise the rent whenever and however they want.
The Chosen Property Management team is a group of licensed professionals with experience in real estate, property management, and other related fields. We set ourselves apart by paying attention to the small details that other companies miss. Contact us to see how we can increase your investment's value today.
