You wouldn't guess the price of a diamond ring, Rolex watch, or antique vase before selling it. Nor should you guess the price of your rental property, as it may be the most valuable asset you own.
Before you agree to a rental, you need to undergo a proper rental valuation to ensure you settle on the most accurate rate. In this guide, we'll share our five top tips for achieving a precise valuation for your rental property.
1. Rental Market Analysis and the Property Location
Where your property is located, including the specific neighborhood, will impact the price.
People want to move to the most prestigious streets and areas with many amenities. That demand will fuel higher rental rates. Factors that people look for in a good neighborhood include:
- Safety
- Pleasant surroundings like parks and high-end restaurants
- Good schools
- Excellent transport links
Check out current market rates in nearby neighborhoods to see how yours fares. Look at 12-month trends, too, as they are helpful predictors of current value.
2. Investment Property Evaluation: Condition and Size
Property size isn't always a straightforward predictor of valuation. A large property in a low-demand area will command a lower rate than a small one in a prestigious location.
However, if you compare two similar houses side by side, the one with greater square footage will typically have a higher valuation. The condition of the property also matters. Interiors that look pristine and offer brand-new kitchens and bathrooms will get a higher rental rate than ones that need lots of work.
3. Look at Broader Market Trends
When the economy is in a downturn, it can impact house prices and rental rates. Predicting every rise and fall in the economy is always a challenge; however, you can look at broader trends.
For example, examine Greater Philadelphia to see whether businesses are moving into the area. Are existing employers thriving, or are they making redundancies? This can provide clues about how the economy and rental prices will fare over the next 12 months.
4. Local Regulations
Local housing laws, such as rent control, will have a notable impact on your valuation.
Always look at the current regulations and whether the government intends to make any changes in the near future. Other laws, such as changes to tenant rights, eviction laws, and rules about security deposits, might also shape your valuation.
5. Real Estate Pricing Strategy: Property and Building Amenities
Tenants are more likely to pay premium prices for a rental if there are many amenities either in the property or building or nearby. Features like pools, landscaped gardens, patios, and private parking provide a more coveted lifestyle.
Your tenancy agreement may also include small print that makes your property more attractive, such as pet-friendly rules.
Getting the Right Rental Valuation for Your Philadelphia Property
You don't want to risk underselling your rental. Pricing that is too low could eat into your profits, and it will be hard to change that rate once a tenant has signed the lease. Use these five rental valuation tips to ensure you get an accurate rate for your investment property.
Property Management International Greater Philadelphia is a full-service real estate agency with a first-rate reputation. We offer exceptional customer service and high-quality property management services to Greater Philadelphia landlords. Learn more about our services here.
