Rental value. For those in the real estate game or those who are looking to make an extra buck renting out your property, this can be a difficult evaluation without experience.
In the United States, the average rent price is $1,249 per month.
But, how do you know if you can justify that rental valuation? Is your property worth a lot more than that in rent?
Here are five ways to come up with a rental value of a property.
1. Personal Finances
Add up all of the expenses that you put into the property currently. These can be things such as mortgage payments, home insurance, taxes, maintenance expenses for the property, utility bills, and more.
Then, add all of those expenses up and figure out how much it costs you to maintain that property every month. Once you do that, you can set the rent price to something a little above that assuming someone is willing to take it.
2. Location
Believe it or not, location comes into play significantly when it comes to renting value.
Is the neighborhood the property is located in safe? Do people in the area make a lot of money? Are there enough people in the area?
These are all things that you have to think about. For example, an apartment with the same dimensions in the northern half of Chicago will get more than the south side of the city.
Think about where people want to live and if your area has anything to offer them. If so, you can charge more.
3. Comparing Properties
This might be the most obvious one but comparing similar property listings in your area can give you a good idea of how much your place might be worth.
Let's say you have a 900 square foot apartment for rent with one bedroom. Then, you look up a couple of listings within 10-15 minutes of you that fit that description and see that those are being listed for about $1,500 per month.
In that situation, as long as those places have not been posted for a very long time, it may be a good guide for how much people are willing to pay.
4. House Value
One way you can determine a rent price is by figuring out the value of the house if you have one and were to put it up for sale on the market. Generally, the recommendation is to charge 1% of the house's value for monthly rent.
So, if the house was worth $300,000 then you would be charging $3,000 rent per month.
5. Rely on Professionals
Finally, this may be the easiest option of all, to rely on the opinions of experienced professionals to see what you can realistically get from your property. This can be anyone from a property manager, a real estate agent, or even an appraiser.
Get Your True Rental Value
If you are thinking about investing in property and renting that out, you want to make sure that you get the rental value that you deserve.
To help you do figure out how to value rental property, you should consult a professional. If you are ready to seek advice and receive guidance from someone like that, contact us today to get started.
