Estimate Rental Value in 6 Easy Steps: A Guide

Table of Content

• Rental Property Calculator
• How to Become an Airbnb Property Manager: The Complete Guide
• What to do if the house you're buying gets down valued by the bank
• What is a good ROI for rental property?
• The Top 6 Strategies to Boost Your Rental Income as a Real Estate Investor
• Places With the Highest Rental Value in 2022

The Fair Market Rent lookup calculator can give you a ballpark estimate of how much you can rent your own property for in a given area. For the most accurate estimate, contact us to request a Comparable Market Analysis . This report is personally prepared to give you a clear understanding of competing properties, market trends, and recent sales in your area.

These resources will give you a complete picture of your home’s worth and provide a solid number to work with. Garrett Callahan is a freelance writer who writes on the ins-and-outs of buying the perfect home. For over six years, he has written extensively on travel, history, and culture, and he spent the past two years researching the home-buying process as a first-time homeowner. Based in Massachusetts, he is an admirer of historic homes and loves an old house with a good story.

Rental Property Calculator

Real estate comps refer to the act of finding a similar property to yours and basing your rental estimate on their rental asking price. Now that you know why you’re renting out your property, the next thing to do is to learn how to estimate rental value of your property. Although this is more common if you’re running a short-term rental, it isn’t uncommon to see these kinds of issues with long-term rental homes as well. In other words, regardless of how well your rental property might be performing, if the market shifts, your property’s performance will be affected. Each investment is different, meaning you may need to reevaluate how to estimate rental value depending on several factors of the property. On the other hand, others rent their properties as part of their overall real estate investing strategy.

But in order for your rental home to be profitable, you will have to set the right amount of rent that won’t scare tenants away while generating a positive cash flow for yourself. Investing in rental homes is the most popular way to make money in real estate. Assuming that your home needs some repairs that cost $15,000, add the purchase price to the repair expense, bringing the total cost to $315,000. Then, you multiply the amount by 0.01 to get your minimum monthly payment of $3,150. To determine value using this approach, an appraiser adds the value of the land to the cost of construction. He then subtracts the loss in value over time, or how much the property has depreciated.

How to Become an Airbnb Property Manager: The Complete Guide

That's your projected net annual income divided by the value of the property. It is expressed as a percentage and determines at what rate you will capitalize on the property. The income approach looks at how much money you're likely to make on a property. It's basically a quick way to determine your return on investment. Replaces your current mortgage with a new mortgage that has more favorable rates and terms. The equity you borrow is added back onto the balance of your new mortgage and you pay it off over your loan term.

Rent is generally the primary source of income on a rental property. Be sure to check with an attorney whether your city has rent control and what laws and restrictions are in place before you determine how much you should charge for rent. Keep in mind that many jurisdictions currently have moratoriums on rent increases to provide housing stability for renters during this uncertain time. They may also help you build a network in the local community that will be invaluable for future questions, uncertainty, or assistance. Here is a list of the top 3 ways to find and research the fair market value calculation of the rental property you may invest in.

What to do if the house you're buying gets down valued by the bank

For instance, if you invested $50,000 in a rental property and received a profit of $70,000, the ROI would be 0.4 or 40%. Looks at the upfront investment costs, expenses and earnings to calculate the ROI. Simply adjust the sliders on the calculator below to customize the financial details. Stacks up against other properties in the area that have similar amenities and the same number of bedrooms and bathrooms. Using your competitors as a baseline, decide how much more you can charge in rent for the extras your property offers.

The Redfin Rental Estimate is an estimate of the fair market rental value of an individual home. Using up-to-date rental data, we look at similar properties currently listed for rent or that have recently been taken off the market. A property’s unique condition, upgrades, and location are some of the factors that may contribute to its fair market rental value. The Rental Estimate is not a substitute for the in-person expertise of a property manager or landlord. It does so by calculating the prices of the surrounding rental properties and using the data to accurately estimate the value of your property. Real estate investors, mortgage brokers, and real estate agents have several tools that help them determine the value of a property.

Aside from the basics of square footage, you also need to highlight the number of rooms, parking spaces, and other features of your property. From having a pool or a yard to how far it is from the nearest grocery store are things that should be included in your description. Buy rental property that is brand new and needs minimal work, buying an older property and then renovating it may be more cost-effective.

The sales comparison approach looks at similar properties based on the structure, the number of bedrooms and bathrooms, and also, the square footage of both the property and the surroundings. The given information is used to determine if one or two properties are similar and whether or not they can and should be compared using the SCA. As the name suggests, the sales comparison approach simply means pricing your property based on the prices of similar homes over some time. You can use the SCA to obtain a rough estimate of how you should price your home.

Our valuations are calculated independently by propertypriceadvice.co.uk and are indicative based on the information you provide. If you decide to sell or let your home, a local estate agent will need to visit to confirm its current market value. To discover how to adjust the rental value of your rental property, there are many things you can do. For instance, you can reduce your expenses, raise the rent, improve your home appeal by beautifying it, or add one or two bedrooms and bathrooms.

This list will include traditional rental properties, focusing on data related to long-term renting instead of Airbnb. Additionally, though most real estate agents or agencies will include rental estimates in their services, not all of them do. A sales comparison approach is a comparison of similar properties in the same market that have sold recently. Appraisers and real estate brokers use it frequently to determine the value of a property coming on the market. And use your home as collateral, it's important to be aware of the benefits and drawbacks, however.

The rule calculates if the monthly rent collected from an investment property would be more than the monthly mortgage payment. Its purpose is to guarantee that the rent is larger than or equal to the mortgage payment so that the investor at least breaks even on the property. To determine how much rent to charge a tenant, many landlords use the 1% rule — which suggests charging 1% of the home’s value for rent. For example, a home valued at $220,000 would rent for $2,200 per month.

The following set of assumptions have been made to make the pricing tool fast and fairly accurate. And here are the five cities with the highest rental value for short-term rentals or Airbnb, based on Mashvisor’s latest data. Although it requires more time and attention, eliminating properties that are not highly similar to the one you’re analyzing ensures that the results you’re getting are accurate. Rental comps are considered the go-to method of estimating the rental value of properties. These may include market changes in the overall market or developments in the local market that can affect the value of the property.

If you decide to work with a professional real estate agent, chances are that they’ll list the property for you. However, if you have not hired anyone, you will need to choose where to list your rental property. For instance, you can use offline sources like real estate agents, some of whom know the fair amount real estate investors are charging for their properties. Another offline way to find rental comps is by meeting with property management companies.