Two weeks after successfully securing a tenant for your Orlando property, you spot your neighbor's home listed online. But to your dismay, you notice it's 20% more than the rent you are now charging.
Has your neighbor made a mistake, or have you?
It's easy to get your rental valuation wrong, but a mistake can be costly. Read on to learn more about setting the right price as we debunk some common myths.
Myth: Property Size is the Most Important Factor
On paper, it makes sense that a five-bed rental property will be more expensive than a one-bed. But applying this across real estate misses the reality of rental pricing. Size is only one of many factors.
The location is equally important, and a trendy neighborhood with great amenities will always command higher prices. The property features and the quality of the interior are also important.
Myth: You Can't Change Your Rental Price
A common misconception among new landlords is that the rental price is set in stone. But there are circumstances during a tenancy agreement where you might want to change the rate - and you can.
For example, if you find an excellent tenant, it's sometimes worth offering a slight discount to keep them on a longer-term lease.
Myth: Low Rent Suggests Low Quality
It's true that when buying products, consumers can often associate cheap prices with low quality. But that's not necessarily true for rental rates.
Rent always reflects market demand and questions over quality are easily debunked with some property photography. So, if you need to lower your rate to secure a tenant, you can do it without worrying about perception.
Myth: You Need Luxury Amenities for High Rental Rates
Your rental income needs to be profitable. However, while luxuries will attract more potential tenants, they won't necessarily equate to higher profits.
High-end bathrooms and kitchens in an area of low demand may not affect your rental rate.
You need to examine similar properties in the area to see the upper limit of what you can charge. And don't overspend on interiors to achieve that.
Myth: Rent Prices Always Go Higher
You will see an upward trend if you track rental rates over a ten or twenty-year period. But zoom in closer on that graph, and you'll notice fluctuations.
The reality is there will be times when the real estate market slows and rates decline. Always consider what's happening in the economy before setting your rate.
Myth: You Need a New Property to Charge High Rates
Newer properties have the bonus of pristine interiors and modern appliances. But this doesn't mean older properties can't command high prices.
Older properties may have other benefits like size, location, and character. Plus, you can spruce up the interiors so the overall package is more appealing to a tenant.
Challenge Assumption About Your Rental Valuation
It's always best to test your assumptions regarding your rental valuation. Otherwise, you could end up with an undervalued property and lose out on potential profit.
Our expert team at SunnySide Properties has taken the guesswork out of property pricing and created a more accurate, scientific approach. Find out what your Orlando home is worth by completing this form.
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