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When you first begin a property business, you'll get a lot of well-meaning advice. But sometimes, all these tips and tricks can leave you feeling even more confused and overwhelmed.
Take rental valuations, for example.
Some people will tell you to price in line with neighbors, and others will hand you complex spreadsheets. Read on as we dispel some common myths about pricing your Cleveland rental.
Myth: Your Interior Is the Biggest Factor
Stylish interiors can make a home a more pleasant place to live. So it's understandable that many people think this is the primary factor behind setting rent prices.
However, this isn't true.
In reality, it's not as crucial as other property features. Most tenants are more interested in the location and whether the property is in a trendy neighborhood with excellent transport links.
Myth: Your Rent Price Should Reflect the Property Costs
Calculating your rent based on your costs as a landlord, plus some extra as profit, is tempting.
However, rent is demand-driven like anything else in the market. You will only command the price it's worth, even if your expenses exceed that.
What this means for landlords is that if the two don't stack up, you will need to find ways to reduce your costs or improve the demand for your property, such as extending it to add an extra bedroom.
Myth: High Rental Rates Mean Maximum Profit
It seems like a simple equation: raise your rent and make higher profits. However, this is a myth. It's oversimplified.
You need to set your rates at a level that reflects market conditions.
If you don't, you'll have more extended vacancy periods, affecting your profits. So, the optimum rental price for high profits is always highly competitive.
Myth: You Can't Negotiate Property Rental Rates
Potential tenants may rule out specific properties because the rental rate exceeds their budget.
However, rates aren't set in stone. A willingness from the landlord to negotiate is often a fantastic way of securing a tenant and keeping vacancy periods to a minimum.
The most successful way to negotiate a rate is to bring something else to the table, like an extended tenancy period.
Myth: Regular Rent Increases Are Essential
There may be times as a landlord when the real estate market moves fast.
In those circumstances, a rate rise could help keep your property in line with similar rentals. But that doesn't mean rent increases should be something you put in the diary.
There may be extended periods where you want to keep the rate level. It could secure a reliable and loyal tenant worth more for your long-term investment than continually remarketing your property.
Rental Valuation: Getting It Right
Making assumptions about your rental valuation in Cleveland can be dangerous. Price it too high, and you could leave your property vacant for long periods. Price it too low, and you're not maximizing your income.
That's why professional valuation advice from our expert property managers at PMI CLE eAgent is essential. You can take the first step now by using our free rental analysis.
