Navigating rental valuations can feel a bit tricky, especially when there are a few myths that could lead you down the wrong path. One wrong turn, and it's a bit like facing a dead end in a maze, with a property that sits empty as you watch your monthly rental expenses continue to exit your bank account.
That's why we've put together this short guide to dispel some of the most common myths around rental valuation.
Myth: You Need to Raise Your Prices to Maximize Your Profits
If your rental profit margins are low, it's tempting to blame your property valuation in Denver. You may even be tempted to raise the price to help improve your profit figures. But don't change it in haste.
A higher rent isn't always wise because it depends on the demand in the local Denver area. Pushing it too high could result in an empty property, which will eat into your profits.
Myth: The Market Always Moves Fast
Denver has historically been a high-performing rental market, which has often served landlords well from a profitability point of view. However, don't let this lull you into a false sense of security about your rental pricing.
The truth about Denver rentals is that demand can dip, and the market can slow, just like any other city. Look for worrying signs in the economy and be prepared to act accordingly.
Myth: Pricing Too Low Will Attract Bad Tenants
Bad tenants are a worry for any landlord, and understandably so.
They can leave you facing unpaid bills, damaged property, or legal costs. One of the most common Denver rental pricing myths is that there is a correlation between cheap rental rates and bad tenants.
This isn't so. You can't predict a bad tenant by the rental rate you charge. The best way to protect your property from bad tenants is to run a comprehensive screening process.
Myth: You Should Invest Lots of Money In Renovations
Sometimes, renovations are a great way to add value to a property or help boost its rental income. But this is not always the case.
It depends on other factors, such as the location, home size, and what tenants need from a property. Always weigh up the pros and cons of any renovation investment, and compare your property to similar ones in your area to see if it's likely to help improve the rental rate.
Myth: You Should Underprice Your Competitors
Underpricing is a dangerous game in any business because it can lead to a price war. The same is true for rental properties.
A price lower than the market average could help you secure a tenant faster, but you don't need to take the risk. You can use other strategies to lower vacancy timescales, such as better property marketing.
The Truth About Your Rental Valuation
There is a science to the perfect rental valuation. It's essential to look beyond common myths and be objective about what your property is worth. Doing that is the best way to secure a tenant.
PMI Kenna Real Estate Foothills can help you discover the right valuation for your property. We have an expert team with extensive knowledge of rentals in Denver, CO. Head here to see more about what we offer.
