Many new or do-it-yourself landlords in North Charleston often make the mistake of not knowing how to calculate a fair market rental rate for their property. Because of this, many rental property owners under- or overestimate how much rent they could charge and end up losing money as a result. This is especially true as rents continue to rise across the country. To keep pace with the market, you have to increase your monthly rent, or else you risk leaving money on the table. Of course, the knowledge of how to raise rents correctly is very important especially when your property is occupied. While good advice on how to do it abounds, the primary and most important tool you have to master and use is the rental property assessment.
Fair Market Rent
A property’s fair market rent is the rate similar properties are being rented out for in a specific 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 North Charleston property, you can begin by finding out what other landlords charge their tenants. You also have to look at comps, or comparable properties, to ensure that the rental properties you have identified are similar in features to yours. To get this information, you need some detective skills. You can begin by checking out posted rentals in your area or the local classified ads.
As an alternative, you can get in touch with a North Charleston property management company like Real Property Management Charleston who will know a great deal about the rental market. Once you have at least three comps in hand, you can calculate the average monthly rent and compare the current rate you are charging with the result. This would be the fair market rent for your property.
Regular Rental Property Assessment
After calculating the fair market rent, you now have to do the next step to keep your rental property profitable. If you want to maximize your monthly cash flows, you have to re-calculate the fair market rent for your North Charleston property at least once a year, or more frequently if rents change very quickly. 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.
But it’s not only about the money. Property owners may be hesitant to raise their rent for a lot of different reasons. Perhaps you worry that your rental property will be harder to lease if you raise your rent. 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. Still, if you have not changed your rents for a few years, your current tenant could be paying way below the rental rate everyone else is paying.
Professional Property Management Pays for Itself
The reality is that it can be very time-consuming, not to mention nerve-wracking, to figure out if you are charging the correct amount in rent. Even after extensive market research, you might still be concerned about raising your rent without getting on your tenant’s bad side. For these reasons, it is helpful to have a professional property management company assess your property and set your rental rates. The cost of hiring a property manager hinders some landlords from doing so. But if you are charging lower than the usual amount of rent, you are already losing more money compared to paying someone to manage the property for you. A professional property management company can ensure that you have an accurate rental rate and work carefully with your tenants. They can help increase your monthly income, therefore paying for themselves in the long run.
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 843-900-4061.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
