Pleasanton, along with 9 other Californian cities, are ranked among the 10 most expensive housing markets.
If you're going to invest in a Pleasanton rental property, you'd better be sure it's going to bring in a significant ROI. To do this, you need to perform a thorough rental valuation. An accurate rental valuation can help you maximize rental potential, but there are a lot of myths around these rental estimates.
Today, we'll explain some of the biggest myths and how they can be detrimental to your success as a landlord. Keep reading and learn how to capitalize on your investment.
A Rental Valuation Is a Suggestion
A lot of work and information goes into a rental valuation. You need to perform a thorough rental market analysis to calculate the income potential of the property. It's not simply a suggestion or a starting point for what you should charge for rent.
If you look at a rental valuation as a mere suggestion, you're missing the point. Doing the valuation properly and adhering to it will tell you the best way to maximize your ROI. Ignoring it will result in vacancies and income left on the table.
You Can Raise Rent to Match Your Needs
While it's true that real estate and rental markets are in constant flux, that doesn't mean you can adjust your rental prices on a whim. Firstly, under the Tenant Protection Act, landlords may only raise their rent by 5% plus inflation (or 10%, whichever is higher) per year.
When you're welcoming a new tenant, you can indeed reset your rental prices. That said, increasing them beyond what the current rental market dictates will lead to more problems than solutions. No tenant will pay more for your rental without getting more in return, so you'll end up with vacancies.
Rent Is Passive Income
Too many first-time property investors think that owning a rental property is completely passive income. If you get your rental estimates correct, no doubt you will earn a significant side income, but it's not passive.
Being a landlord is a lot of work with many associated costs. Firstly, you need to make sure you have ideal tenants in your units. Poor tenants are the biggest source of extra cost and stress for landlords, so tenant screening is a must.
Once you've got a good tenant, you need to maintain solid landlord-tenant relations. This involves prompt rent collection, responding to tenant requests, and performing preventative maintenance on the property. Do all of this well and you'll maximize your rental income.
Why Property Management Is a Must
These are a few myths about the rental valuation process. Naturally, things aren't as simple as they're presented to new landlords, but they don't have to be difficult. If you're feeling overwhelmed by the work ahead of you, you can always enlist the help of a property manager.
A property manager, like Advantage Property Management Services, can help you with every aspect of property investing, from the rental valuation to tenant management. If you want to learn more about what we do and how it can help you thrive as a landlord, contact us today.
