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Rental Property Value Assessment Tips

So you’ve decided you’d like to rent out your property. Owning a property that you’re renting out can be very empowering and provide a degree of financial security in these hard economic times. But, how much should you charge? Well, there are some questions you should ask yourself prior to deciding how much you’d like to charge your tenants or if you’d like to take on this new, exciting responsibility.

First, how much does it cost to have your property active and functioning as a home? A lot more goes into it than you may realize. Consider any mortgages that are on the property as well as maintenance (assuming that you’ll be hiring help—a landlord’s job is never done!) and professional services that you offer to your tenants, such as keeping the grounds tidy or adhering to the standards of a rental property (like painting once every two years, etc). Also, consider if you will you be paying for all the utilities, some of them such as water, or none at all. Be aware of year around costs for things like water and electricity as well as any discounts or programs provided to rental properties. These are important to consider when you offer utilities to tenants as the prices can fluctuate depending on your area.

Also, consider repair and replacement costs. Will you have to hire someone to repair a large appliance if you cannot, or is it more economical to purchase a new one? Keep in mind today’s prices—a new refrigerator can cost anywhere between over $1,000 well over $2,500. Are you charging enough rent so that when that happens, you’ll have enough cash to cover the cost? The best way to determine this is to consider the age and condition of your furnished appliance, the reputation of the brand, local repair costs as well as the average rate of appliance sales in your area.

When pricing your rental property, it’s good to consider the shape of it in addition to the costs of maintaining it. Basically, no one wants a dump and would be hard pressed to rent one, much less at a price they may consider too expensive. You should make sure that the house, mobile home, apartment or condo that you’re trying to rent out is desirable. The better looking it is, the better chance you’ll have of a potential tenant paying the rent you need to charge. A fresh coat of paint, new carpet and the right lighting can go a long way! Plus you’ll probably attract a more desirable sort of tenant, like someone who appreciates the care you put into their new home and not someone that’ll cost you more money in the long run.

In real estate, you’ll hear this all the time: location, location, location. It’s no less true for rental properties. If your home is within walking distance to a great elementary school or nice public park, you’re likely going to have a lot of interested families. Whether you’re more likely to give a working class family a break or not is up to you, but consider what businesses are close to your property. Also, consider the crime rate in the area. Does that make it more or less desirable? You may be able to charge more, or may choose to charge less, depending on the businesses around your property and the neighborhood.

Finally, it is important to understand your tenants and potential tenants. They are looking to get the most they can for their very valuable dollar. Aren’t we all? This is where it is good to price competitively. Be sure not to cut into what you HAVE to charge, but try to make sure your lovely property is exactly what your ideal tenant needs for the price they want. Compare your property to similar ones in the area. Can you afford to charge less every month? If not, what can you do to make your property a better choice than others? It is essential that you are able to cover your costs, but putting the right monthly price tag on it means that you’ll attract more potential tenants.

Whatever price you choose to place on your rental, you could consider background checks on your serious applicants. This does cost (perhaps something you can include in your deposit), but by knowing exactly who will be living on your property, you’ll have a better idea of any financial complications that may arise later.