For decades, real estate has been one of the best ways to invest. But nearly every property owner has lost money on at least one deal.
Often, that loss could have been avoided with a rental property valuation. A lack of information can lead to poor decisions or missed opportunities. Having a full picture of your property allows you to get the best return.
Once you have an investment property value assessment plan in place, it’ll be a key part of your business. Check out these strategies to get the most out of this valuation.
Importance of a Property Valuation
Sometimes it can feel tempting to just jump into real estate investing. You don’t want to miss the best deals by taking the time to do thorough research.
But this is a huge mistake!
The real estate market is always changing, valuations help keep you in the loop. This information can be used to:
- determine a good purchase
- make a plan for renovations
- change rent prices
- have negotiating power
Experts agree that getting a valuation done at least once a year is the best way to stay profitable. You can back all of your decisions with sound evidence!
Track Market Trends in Your Area
The most common type of valuation is going to focus on a property market analysis. This is taking a deep dive into the real estate market in your area. And it will specifically target properties that are similar to yours.
You’ll be able to get insight into what similar properties are selling for at the moment. That is key information if you’re looking to buy (and don’t want to overpay).
This type of valuation will also look at:
- how long owners keep properties
- changes to taxes
- differences in the surrounding area
- any other patterns in properties
Start with Rental Income Forecasting
A huge part of a market watch is also spotting trends in rental prices.
Most real estate investors are going to be renting their spaces out to make their return. So setting the right prices is key to landlord profitability.
The last thing you want is to set rent so high that no one signs a lease. Or too low so that you don’t make anything. This kind of information will help you find that middle ground where everyone is happy.
A yearly accurate rental property valuation will help you keep the right prices.
Factor in Potential Renovation Costs
It’s not often that a property is ready to go without any extra work. It’s even less common (if not impossible) that the property will never need work.
Most rental properties need things like updating fixtures, sprucing up curb appeal, or adding amenities. These renovation projects can range from affordable to expensive depending on the specifics.
But no matter the cost, those expenses need to be factored into the total.
Getting a property valuation can help you see what is possible as far as projects go. It’s the best way to make smart financial decisions about your investment.
Focus on Evaluating Rental Income Potential
One of the best real estate investment strategies is to watch your rental potential. No one wants to leave money on the table.
When you get a rental property valuation, you’ll get a clear idea of what you can charge tenants.
It will look at the value of the property as well as what similar places are currently charging. Those numbers should be your guide as you set your prices. And they’ll need to be updated every year as the market changes.
This part will also give you more negotiating power during lease renewal talks.
Order a Full Property Inspection
When someone is thinking about a property valuation, they usually focus on the market watch. But skipping the full property inspection is a huge mistake.
The more details you give for the valuation, the more accurate it will be.
During a home inspection, the team will look into every nook and cranny. They’ll start with the foundation, making sure there are no cracks or damage. They’ll also look into all the systems of the home to make sure they function.
They’ll also check out the walls, plumbing, and roof. This gives a real-time view of the value of the property.
This information can also help you make plans for the future of the property.
Work with a Professional Team
Getting your property valuation is just the first step toward real estate success. But many don’t know what steps to take next.
One of the best things a landlord can do is to hire professional help. A management team can handle things like:
- screen tenants
- security deposit and rent collection
- schedule and manage repairs
- negotiate lease renewals
- market vacancies
Delegating these tasks to a management team allows you to save operating costs. Then you can reach the full potential of your valuation.
Use Information for Smart Investing
The information you get from a valuation can be invaluable if you use it correctly. Too many property owners don’t take advantage of the insights and miss out on big opportunities.
It’s good practice to learn how to read reports and analyze what it means for your business. This also allows you to check in often to see how you’re doing.
A valuation allows you to take a step back to look at the bigger picture. With these insights, you can see your property in the grand scheme of the market. And that gives you the power to make smart investments.
Strategies for the Most Accurate Rental Property Valuation
A lot goes into being a successful real estate investor. Getting an accurate rental property valuation is the first step to success. Whether you’re looking to buy a property or update your rates, this information is the key.
The next step in making the most of your investment is getting the right help. A good property management team will make all the difference.
At Reedy & Company, we care about making each investment the best it can be. Our team has all the expertise from managing 3,500 properties. Contact us today to see exactly how we can help you!
