Knowing the value of your rental property investment is key to success and profitability as a real estate investor. How much rent you can reasonably charge and when to increase the rent are key considerations for all property owners. It’s just another part of owning a rental. To do so accurately requires a level of expertise and knowledge that takes time and work to accomplish properly. How, you ask? By thoroughly and regularly evaluating the rent in your Colorado Springs rental home. Too low and you could potentially lose out on important income. Too high and you’ll potentially lose money from an increased vacancy. So how do you properly evaluate the rental market and what do you need to consider when setting the rent on your Colorado Springs rental?
Tips for Evaluating the Rent on Your Colorado Springs Rental Home
Know Your Current Market and Trends
The rental market never stays the same. Change is a given, which means that rental property owners should conduct a market analysis and rental rate evaluation regularly. The best time to do so is when the current lease is up for renewal or when the current tenants put in their notice to vacate. Both of these key indicators signal that it’s time to do your homework. What are comparable homes on the market asking for? How long are they staying on the market? Knowing the rates and trends of the current time period provides a key snapshot of the market and what tenants will reasonably pay. For an in-depth analysis of the current market and a full evaluation of your rental home, Real Property Management Colorado offers a free rental analysis. Our report provides a snapshot of comparable homes on the market and what they rented for as well as a reasonable rental rate for your property based on the details of your home. Our experts provide key insight into the current market, so why not put it to good use?
Evaluating Your Rental Property
Part of evaluating the rent for your property is assessing the property itself. Knowing what your property offers compared to the competition helps to narrow down the exact rent you can reasonably ask for in the current market. To do so, take account of all the features of your home, including number of beds and baths, square footage, amenities and features, upgrades, community amenities, location, etc. Compare these to 3-5 similar properties available in your area and see how yours compares. Does your home offer all of the same features? More? Less? Consider how your property stacks up to the competition and adjust your rate accordingly.
The Importance of Regular Evaluations
Staying in line with market trends ensures you’re making the most of your investment. Reviewing your rates regularly helps to maximize your income and keep your rental property profitable. We recommend completing an evaluation yearly to ensure your rates are both competitive and reasonably aligned with the current market. This helps to earn the most possible income while also avoiding situations where a drastic increase is needed after years of keeping the rate the same, which can easily drive reliable tenants away.
When to Increase the Rent
Two situations arise when a rental property owner should consider if a rent increase is possible: 1) when your current tenants move out, and 2) when your current lease is up for renewal. The first scenario is straightforward. The second, however, requires a greater level of finesse and understanding. When considering a rent increase for a renewal lease with your current tenants, you must take into consideration a few different factors. First things first, Colorado prohibits landlords from raising their rent more than once per year for the same tenants, meaning that if your lease was less than 12 months, odds are you can’t raise the rent for the renewal agreement. Avoid this issue altogether by sticking to the industry standard of 12 months whenever possible.
The second thing to consider is balancing your financial goals with the budget needs of your current tenants. The goal is to keep reliable tenants in your property, not drive them out, so stay flexible where you can. Consider a middle ground between market rates and what you’re currently renting the property for. Choosing to offer slightly below market value while still increasing the rent provides a win-win for you and your tenants. If there is no wiggle room, consider keeping it the same for another year.
Properly evaluating the rent on your Colorado Springs rental requires time, knowledge, and expertise. It requires negotiating skills and a level of professionalism to help balance the needs of your tenants with your own financial goals. So wouldn’t it be nice to have a reliable resource to handle all of that for you? That’s what Real Property Management Colorado is here for! Our property management services take the guesswork out of finding the right rental rate and allow you to take a hands-free approach to the entire process. And if you’re more of the hands-on type, our free rental analysis puts our knowledge and expertise to work for you without taking the reins from your hands. Contact us today!
