Around 32% of Fredericksburg's residences are renter-occupied, so property investors have great opportunities.
Investing in Fredericksburg real estate is a no-brainer. It's a growing city with a thriving rental market, so you should be able to find a property that brings you great returns.
You must still do some due diligence before selecting your investment property. A rental valuation can help you project how much ROI you'll get from a property before buying it. There are right and wrong ways to go about these valuations, however.
Today, we'll explain some rental property pricing myths. Keep reading and we'll help you better determine rental income estimation.
High Rent Means More Profit
A lot of newer property investors have the feeling that they need to charge higher rent to earn more profit. This mindset is a huge mistake that can cost you a lot of money.
You need to consider occupancy rates. If your rent prices are so high that you scare off a chunk of your potential tenants, you'll lose money in the long run. Rental prices that are far out of line with rental market trends are guaranteed to create vacancies.
Lower Rent Guarantees Tenants
On the other hand, charging too little can cause problems too. Rental property appraisals should help you determine the more sensible rental price. Some landlords think that lowering this price will help attract tenants, but that's not always the best thing.
Most renters examine the rental market, just as you should. They'll have a budget in mind and stray away from properties that seem too cheap to be legitimate. You'll end up with less desirable tenants, which will result in more tenant turnover and profits left on the table.
Size Is Everything
Numerous factors go into a rental valuation. Size is one of them, but simply offering a large rental property doesn't mean you can charge exorbitant rental prices. Location, property condition, upgrades, and local amenities all play a big role in how much you can charge.
Most tenants would choose something smaller that's well-managed and in a great location over something huge. To attract tenants, highlight the best qualities of your rental.
You Can Increase Rent As Much As You Want
Every state has unique laws around rental increases. In Virginia, unlike many other states, there's no limit on how much landlords can increase their rent with basically zero notice. This might put dollar signs in your eyes, but rent increases aren't always a good idea.
Mostly, you'll just alienate good tenants and cause them to look for new housing. Thus, exorbitant rent increases are more likely to create vacancies and hurt your bottom line.
Get a Professional Rental Valuation Today
Performing a thorough rental valuation is integral to rental property pricing. It takes into account every aspect of the rental market, as well as the individual property to give you the rental price that makes the most sense.
If you're having trouble getting an accurate rental price for your property, hiring a property manager is the move. Gem Realty Group can perform a rental valuation on your behalf so you don't have to. We've got a deep knowledge of the Fredericksburg rental market, so contact us today to find out what your rental property is worth.
