Did you know that in Arizona, the average rent price is $1,052 per month?
If you are a property manager or an owner of an apartment building, you may be trying to figure out what the right price is to charge incoming tenants during these times.
So, the question is, what is your rental property worth? Here is how to do a rental valuation.
This is a pretty simple approach, as you would just have to take a look at what other people in your area are charging for similar apartments.
Let's say you were trying to rent out a studio apartment that was 600 square feet. You would then look up other studio apartments that fit that description in the Phoenix area and if several listings were charging around say $1,200 per month, you could then feel confident about listing your apartment for around the same price.
Cost of Maintaining
This pretty much allows you to account for all of the expenses that you put into the apartment and then pass those expenses along to the renter. Expenses can include things like mortgage payments, average maintenance costs, covering for vacancy rates, taxes, utility costs, etc.
You need to add these expenses and anything else that you can think of to keep your property livable and come up with a total for yearly expenses. Then, divide that by 12 for a monthly average and then you will have a better idea of how much you need to charge a renter to cover those bills.
Gross Income Multiplier
It can also be called the gross rent multiplier, but the gross income multiplier calculates the amount you purchased the property for and divides it by the expected income you will get from rent.
However, the con of this system is that it only takes into account those two things. It does not take into account the hidden costs of keeping the property livable such as the things above.
But, if you paid $1 million for a property and get $250,000 in rental income per year, then it would really take you four years to pay that off. If that matches up with other properties in the area, then you have a good deal. If not, then you may need to adjust your price.
Ask a Professional
One of the easiest ways you can come up with the value of a rental property is to ask someone who has experience with dealing with these kinds of properties. These can be people such as a real estate agency, an investment group, a property manager, or even an appraiser.
If you ask someone who you trust and has the right experience, then you should get a price that matches up with the fair market value of your property.
Find Your Rental Valuation
These are just some ways that you can get an accurate rental valuation for your property.
Are you ready to dive in? Contact us for more help with your property today!