Have you been shopping around for a property in Modesto, California? The city has had sustainable population growth following a small slump at the start of the decade.
This brings opportunities for investors to find a great property with which to start a rental business. But how much should you charge for a rental property? What are the sensible rental prices to charge?
This guide will eradicate some of the common myths about rental valuation to help you get started.
Here's what you should know:
Myth: Rental Valuation Is a Rule
You aren't required to conduct a rental valuation, however, it's always a wise choice. You want to charge a rate that will suit most renters. The rental valuation gives you this ideal rate.
However, another common myth is that you have to charge the exact price that a valuation gives you.
You're free to charge as you wish as Modesto doesn't have rent control laws. It's best to stay within the range of the valued amount. This makes it likelier for you to collect your rent on time.
Myth: Rental Valuation Is Unnecessary
You may wonder whether it's worth your time to conduct a rental valuation since it's not obligatory. However, it's a myth that you never need to conduct such a valuation.
Rental valuation saves you time while seeking potential tenants. You'll know what price to offer to attract the most tenants.
Most tenants will also have an idea of what the reasonable rates are. They'll be deterred if they feel you're charging an unjustifiable rate.
If you wish to charge more, you'll want to offer incentives to your tenants. This can include offering amenities to them. You can also charge a lower monthly rate if tenants sign a longer lease.
Myth: I Can Predict Rental Value
This is a huge mistake even for professional landlords. You can't predict how much you can reasonably charge for your property.
For example, let's presume most properties in your area go for a rate of $1,000 per month. Your property may have factors which allow you to charge higher or lower rates.
There are other factors that may lead you to want to charge a higher rate. When there's a high rate of inflation, landlords often wish to charge more to keep up with the cost of living.
However, if you charge much higher prices, it may cause your tenants to avoid lease renewal. Even when there's inflation, your rental value might stay the same.
Find Your Tenants
Now you know the truth about rental valuation and the role they play in helping you find tenants.
You aren't required to charge the rental value. However, it's always best to stay close to that price. This is a crucial step towards seeking the best tenants. Most landlords aren't the best judges with regard to rental value.
If you need help finding tenants, you might want to hire a property management company.
PMI Central Valley has been making strides in property management for over 20 years. We look forward to helping you.
