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Rising Rental Rates & Regular Rental Property Assessments

Hand Holding Magnifying Glass Over Rental PropertyOne big mistake of new landlords in Little Rock is not knowing how to calculate a property’s fair market rental rate. This is the reason why a lot of property owners are losing money monthly by under- or overestimating how much rent to ask for. This is especially true as rents continue to rise across the country. Increasing your monthly rent helps you keep pace with the market, and helps you avoid leaving money on the table. Of course, you must know how to raise rents the correct way, especially when you have an occupied property. The most important tool you need to master is the rental property assessment. There is also a lot of good advice on how to do it.

Fair Market Rent

The fair market rent of a property is the usual rate at which similar properties are being rented out in your area. This value varies from one neighborhood to the next so you really need specific and local numbers to calculate the market rent correctly.

For a Little Rock property, you can begin by finding out what other landlords charge their tenants. You can also identify comparable properties, or comps, to ensure that you are benchmarking with similar rental properties. To get this information, you need some detective skills. You can start with posted rentals around your area and ads in local classifieds.

As an alternative, you can get in touch with a Little Rock property management company like Real Property Management Hometown who will know a great deal about the rental market. Once you have at least three comps in hand, you can calculate the average monthly rent and compare the current rate you are charging with the result. You now have the fair market rent for your property.

Regular Rental Property Assessment

Once you have calculated the fair market rent, the next step is to keep your rental property profitable. You have to re-calculate the fair market rent for your Little Rock property at least once a year to maximize your monthly cash flows. If rents in your area tend to fluctuate, you might need to recalculate more often. In the few years that have passed, a shortage of single-family rental homes has led to a surge in rental rates in almost all markets all over the country. You could be missing out on additional income each month if you have not done a rental property assessment in your area recently.

But it’s not only about the money. Property owners hesitate to raise their rent for many other reasons. You could be worried that your rental property will be much harder to lease out if your rent is higher. Some landlords fear that if they set their rent at the going rate, their rental house will become less competitive, and they will have trouble finding tenants. Still, others do not want to risk angering a current tenant who could have been renting for a good while. Of course, if your rent has stayed the same for a few years, there is a good chance your tenant is paying way below the usual rental rate for your area.

Professional Property Management Pays for Itself

It can be time-consuming, and even nerve-wracking, figuring out the correct amount in rent to charge. Even with intensive market research, you may still be concerned that raising your rent will cost you your tenant. That is why having a professional property management company can be helpful in assessing your property and setting your rental rate. Some landlords balk at the cost of hiring a property manager. But, considering that you are not charging the right amount of rent, you are actually already losing more money than you would pay someone to manage your property for you. From ensuring you have an accurate rental rate to working amicably with your tenants, a professional property management company can help increase your monthly income, effectively paying for itself.

Would you like to know more about what a professional property management company has to offer? Contact us online today or give us a call at 501-701-4702 or 501-303-6870.

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