Rent is a hot topic these days, and for good reason. Recent studies have shown as many as 12 million Americans dump half their salary into rent alone.
As such, it's made many landlords think twice about how they price their properties. Setting a price that's too low or too high could lock you into a rental lease that you'd regret. The reason you set those prices wrong probably comes down to one thing: myths about rental valuation.
Today, we take a look at the many myths of rental evaluation that may be affecting how you price rentals. Then you'll be ready to put your baby on the market in Kansas City.
Rental Valuation Always Goes Up
Make no mistake, there is a massive housing crisis across the nation and in Kansas City. Fewer developers are building, and more people are buying. All this has created a situation where housing is incredibly expensive, and therefore lucrative for investors.
This has led many to believe that the rental market is on a nonstop upward trajectory. Every rental property will be worth more next year than the previous, they say. That simply isn't true, using the 2008 market crash as an example where properties fell by 5.8%.
In short, market ups and downs may occasionally result in pricing going down. However, it is safe to assume a general upward trend.
Rental Increases Can Be as Big as You Want
You might be thinking that since it's your property, it's your rules. You control rental pricing and nobody can stop you. This isn't the case, especially when it comes to changing rent for renewing tenants.
For starters, there are laws that determine how much rent can increase year over year. It's illegal to increase above that rate. The only exception is for a rental that has gone back to market.
Even if you did increase, you'd run into resistance. You might have rent collection problems if your tenants feel the increase was too steep. This can lead to legal battles and a struggle with eviction.
You Should Base Rental Income Off Property Value
Another fallacy is the seeming correlation between rental income and home value. The logic assumes that a big, expensive house would naturally command higher rent. This isn't necessarily so.
What's really going to matter are things like amenities and a good rental location. Being downtown near everything is worth more than a bungalow in the countryside. Tenants are going to choose an apartment with a liberal pet policy over one that strictly forbids furry friends.
Find More Myths at PMI Fountain City
Rental valuation myths may be causing you to sell too high or undercut too low. Avoid falling for the misconception that rental pricing will always go up, and that you can set it at any amount anyway. Further, don't base rent solely on how much you paid for the place.
PMI Fountain City in Kansas City offers a comprehensive, uncompromising suite of services. Our customer service can't be beat, nor can our excellent day-to-day rental management. Become one of our happy customers by getting a free rental analysis.
