Becoming a property owner is an exciting prospect for anyone. It's one of the best ways to pay off your property without the financial strain, and eventually, could become a handy stream of passive income.
But if you're new to the property game, pricing your rental at the right price is always a case of trial and error. You might receive plenty of opinions on your rental valuation, but at the end of the day, you have to do what's right for you, your budget, and your tenants.
Don't let these myths surrounding rental pricing impact your decision...
1. I Can Price My Rent However I want
There is a common misconception that you can set your rental price as high as you want, just because you own the property. But this only applies if you want to make your life difficult when finding good tenants.
Rental price often boils down to supply and demand in your area. If you price your rent too high for the amenities on offer and the size of your property, plus nearby rental prices, you'll have a tough time finding tenants.
It's important to familiarize yourself with local market trends and average rental rates and set your price accordingly.
2. You Can Raise the Rent Anytime You Want
This is a common myth among renters and landlords alike. However, it's just not fair to raise your rental price without enough forewarning. Due to rental control and lease contracts, you cannot raise the rental price whenever you see fit.
Depending on the state and county of your rental property, you're also bound by limits on how much you can raise your rent. You have to give your tenants 30-60 days' notice if you intend to raise the rental cost. This timeframe will depend on the percentage of the increase and the location of your property.
3. Rent Pricing Completely Depends on Inflation
If you're out of touch with your local rental market, this might be a myth you're more likely to believe as a landlord. However, inflation is not the only factor that influences your rental price or valuation.
The reality is you have to take into account several other economic factors when pricing your rent. If you base your rent on the expected inflation rate, you could end up overcharging or even under-pricing yourself.
The bottom line is that you should do your homework on the economic factors impacting rental prices, rather than relying on the expected inflation rate.
4. As a Property Owner, You Know Your Rental Value the Best
If you're a first-time property owner, this myth could not be further from the truth. No matter how much you've studied your local market, and the prices of comparable properties, this doesn't make you an expert in property valuation.
Your best bet is to rely on a seasoned real estate agent who can offer advice on the true value of your property. From there, you can both work on pricing your property right in order to attract the best tenants.
Need Expert Help With Your Rental Valuation?
If you're a new property owner and need an expert recommendation on what your property is worth, PMI Property Management is your go-to. We also offer free rental analysis based on your property valuation so that you can price your rent fairly.
Get a free rental analysis today and secure the best tenants for ultimate peace of mind.