Over time, a Maryland rental property’s value can fluctuate depending on its specific location and the local real estate market. Most landlords have no idea how much their rental property is really worth until they do a rental property valuation.
But how often should you do a rental property valuation? When should you re-evaluate your investment property?
By the end of this article, you’ll have the answer to these questions and a helpful tip to maximize your rental property investment.
There are two ways to value your rental property. The first is the value of the actual property itself. The second is how much the property could ask for rent.
Calculating the value of the property can help real estate investors gauge how their initial investment is performing. It can provide an estimated amount for how much the property could sell for in the current market if the investor is ready to part ways.
Conducting a rental analysis to determine how much you can rent your property for involves comparing the property to nearby rentals. Based on the property size, condition, age, and included amenities, you can determine how much tenants would be willing to pay to rent it.
While the real estate market moves fast, it’s recommended to do a rental property valuation once a year.
In a super hot market, you may want to do it twice a year, but only if you are looking to sell, dip into your equity, or remortgage to expand your real estate portfolio.
So, we’ve determined that you should do a rental property valuation once or twice a year. But what are the circumstances of having one done?
If your current tenants’ lease is up for renewal, then it’s time to re-evaluate how much you can rent your property for. Many landlords choose to slightly increase the rent each year when it comes time to renew the lease.
However, this is a delicate situation. If you raise the rent too much, your tenant may decide not to renew. So, consider your experience with the tenant. Are you willing to delay a rent increase to keep a respectful and reliable tenant?
If you decide to raise the rent for a tenant with an annual lease, you must notify them in writing at least 90 days before implementing the increase. It’s also important to know rent increase limits in certain counties nationwide.
When your current tenant decides not to renew their lease, it is the perfect time to do a rental property valuation. Compare your rental property to others in the area and see what similar properties ask for rent.
As you write your listing, feel free to test different rent prices to gauge the market. Start with a price you may consider high, based on your comparative market analysis (CMA), and lower it gradually if you are not getting any interest.
Did you recently invest in renovating and upgrading parts of your rental property? Then, it’s time to do a rental property valuation!
Adding updated appliances, such as a washer and dryer, HVAC system, or even a refrigerator or oven, can help increase the value of your property. Upgrading carpeting to hardwood floors or updating bathrooms can also contribute to this.
So, whether you’re looking to sell your rental or increase the rent after renovating, this is a great opportunity to see what your property is now worth in the current market.
Real estate investors usually hold onto their properties for five to ten years. After a decade of managing a rental, some investors may decide it is time to sell either to exchange it for another investment property or to cash out completely.
If you notice the real estate market is doing well in the area and there is high demand from buyers, you may want to consider having a rental property valuation done to see how much you could sell yours for.
It’s always good to know how much your property is worth, even if you don’t plan to sell for another few years.
The key to making a lucrative investment in real estate is finding an up-and-coming location. If you’ve noticed the area has attracted more residents and restaurants or businesses have started opening, then it could be a good time to get a property valuation.
There are more factors to the property’s value than just what is inside the property. The location also plays a significant role!
Getting a rental property valuation can also help investors build their real estate portfolios. With remortgaging opportunities, using equity, and taking advantage of 1031 exchanges, investors can make their money work even harder to develop their portfolios.
Having a higher valuation for your property can help you leverage your previous investment to acquire future investments and further enhance your portfolio and path to financial freedom.
The world of real estate is a vast one. With various investment opportunities, tax benefits and schemes, and market opportunities, keeping up with everything while building your portfolio can feel overwhelming, especially if you’re doing it alone.
That’s where Mainstay Management comes in!
As Maryland’s leading property management company, we do more than take care of the day-to-day tasks required to manage your property; we also help you maximize your investment and plan for future opportunities.
With detailed routine financial reports and expert real estate advice, we can help you build your real estate portfolio, evaluate your current rental properties, and strategize your next investment moves.
Are you ready to work with a team of experienced real estate professionals to maximize your ROI, increase your property value, and find high-quality tenants?
Contact us today and see how we can help you get the most out of your rental property!
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