Investing in real estate property is one of the smartest decisions to make. Every property investor has a dream to own a property that has a strong rental return and can deliver a large capital gain. Hence, understanding potential returns on investment (ROI) is imperative. How much rent to charge for your investment property? This is the question that strikes every real estate property investor. Understanding the ROI on rental property investment requires homework. Working out on rent value is a vital task to accomplish for the success of your rental investment strategy. You need to evaluate the rent value of your investment property strategically keeping in mind you get increased rental income at the same time considering rent value is not out of range for potential tenants.
Calculating the right rent value of your investment property can be a difficult process. There are numerous pitfalls you ought to avoid and there are also some ways by which you can calculate the best rent value of your property. So, read on to find out how you can calculate the rent value of your real estate investment property.
Important Considerations to Decide on a Suitable Rental Amount for Investment Property in Maryland
There are plenty of factors you need to take into account while setting the rent for your rental property in Maryland. Here are top 7 considerations you should take into account for your rental property investment in Maryland.
1. Look at the Market to Estimate Rent Value
Analyzing the local market is one of the primary considerations you should take into account. You can figure out approx. rental fee for your rental property by working out on market analysis. Give your time to survey the market with an aim to figure out the median rental prices in your area. Look at population statistics in your area and also try to understand what the rental fee trends in the area are. This will help you determine what rental supply and demand are like in your area.
Keep in mind rental fee can vary from area to area in Maryland. For example, the rent value of 3 BHK properties in Baltimore can differ from the rent value of 3 BHK properties in Glen Burnie. In fact, “how much rent to charge for your investment property in Maryland” may vary from street to street. So, landlords need to have work on market research to determine the best rent value of the properties. As a general, they can charge around 1.1% of home’s value. For instance, if you have a 2BHK home worth $50,000, then you can consider charging approx. $550 per month as a rental fee for the property.
2. Look at the Property and Consider What Can Increase Rent Value
What are the types of your property? How many bedrooms are in your rental property? What are the available features at your property? Is parking facility available or not? What is the overall condition of your property? These are the key factors which can affect the overall rent value of your property. If you want to maximize the rent value of your property then obviously you need to keep your property well-maintained and enhance the features.
3. Compare Apples to Apples to Know the Rental Trends
Compare your rental property with other similar types of properties in the same locality. Figure out how much other property investors or landlords are getting rents on their properties. Understand the trends and decide how much rent could be the best of your rental property in Maryland.
4. Look at Online Resources and Tools
There are several online resources which can help you to calculate the standard rent charge for your property. You can take the standard rent ideas from the online real estate sites and listing sites like Zillow.com, Realtor.com, Trulia.com, and MLS.com. Apart from these property listing sites, you can also find several online rent value calculator which can give you an idea of approximate rent value of your property. Rentometer.com, Calculator.net Rental Property Calculator and Zillow’s Rent Affordability Calculator can be very helpful tools for property investors are endeavoring for knowing the approx. rent values of their properties in Maryland area.
5. Think About Expenses Associated with Rental Property
Consider the expenses associated with your rental property to estimate the required minimum return on investment (ROI). Keep in mind, the rent should not be determined based solely on your need to cover all expenses done on a rental property. But still, you need to consider expenses to determine the viability of the investment. Expenses over property of the same type may vary county to county in Maryland because of multiple considerations.
Some common rental property expenses are cleaning cost, maintenance & repairing cost, taxes & insurance, advertising & marketing cost, travel cost, HOA (Home Owners Association) Fee, vacancies, professional assistance charges, vacancies, paper & documentation cost, and legal charges.
Maintenance cost is something which you need to take into account seriously. If you don’t have your property well-maintained and cleaned there are lower chances of getting your property rented for a good amount. If you are the owner of a new property then still you need to expend approx. 5% of monthly rent on your property. If you have older property then you may need up to 20% of monthly rent to be expended on property maintenance.
6. Make an Independent Assessment Approach
You need to make an independent assessment of your rental property in Maryland. Take into account multiple considerations such as maintenance, cleaning, and advertising. Figure out how much you have expenses on the property and what amount you are getting from the property as rent. This will ensure that you get a fair price for the rent of your property.
7. Get Professional Assistance
Making an independent assessment of a rental property is indeed a good idea. But you can also get a professional assessment of your investment property. There are many property management companies in Maryland who can assist you in professional property assessment to determine the rent value of your property. Consult the right and reliable property management company in Maryland. You must ask questions to property management companies before hiring the one. You can trust on Pioneer Enterprises LLC for the legitimate property management services across Maryland.
8. Adjust on Rent
Many landlords or property owners simply “Set and Forget” the rental amount for their properties. But you should not follow the same practice. In fact, it can harm your returns. So what you need to do is adjusting the rent amount and stays up to date with rental trends in the market so that you can make an adjustment to increase your rental returns, if possible.
The Bottom Line
Most serious real estate property investors in Maryland will look at the aforementioned valuation methods before making a rental decision. So, follow the aforementioned ideas to determine the right rent value for your investment property and get into the real estate investment game with confidence.