How to Estimate the Rental Value of a Home?
You have two options when you own real estate: occupy it or make it grow by renting it out. The rental value is not only useful for calculating the rent, it is also necessary to take into account the reference rent and the housing charges. Before estimating the rental value of a property, we take a look at the important elements.
How to estimate the rental value of a property? What are the steps to define to estimate the rental value? How to fix your rent?
Know How to Define the Rental Value
The first way to get an idea of the rental value of a property is to be able to identify the amount of rent per m². The rent per m² corresponds to the average value of properties that are on the market within the same location. This also depends on the type of property corresponding to the desired rental (house, apartment, car park, cellar). You can find these elements on the web such as on notary sites, for example. You may also apartments for rent in tribeca new york city.
If the rent per m² is an indicator, it does not, on its own, define the rental value of your investment. Other elements are to be taken into account, such as those presented below.
The duration of a rental lease is not the same whether the property is rented bare or furnished! Be sure to follow the regulations in case of rental.
Know How to Identify the Characteristics of your Property
In order to set the amount of the rental value as accurately as possible, knowing how to identify the characteristics of your property is essential! Three factors must be taken into account:
1. The district in which the property is located: indeed, if the property is in a very popular district, then that is enough to be able to increase its rental value. In the same way, if it is close to amenities (the metro for example), then the attraction for it will be stronger.
2. The configuration of the accommodation: small areas are much more popular. The rent per m² is therefore much higher for a studio than for a T4 (four rooms).
3. The services that the accommodation offers: the accommodation is furnished , there is parking or a large terrace, etc. These elements can increase the rental value by a few hundred euros.
Tip: furnished accommodation can increase the rent by 15% on average.
Knowing the Market is a Good Indicator for Setting your Rent
Doing an overview of the rental property market in your area is also a very good way to set the amount of rent. Keep in mind that the objective is to rent the apartment, you may even pay a loan: an empty apartment makes you lose money!
Tip: going to the rental sites allows you to have an overview of the amount of rent you can set.
Identify the Condominium Fees!
Condominium charges are items that can be included in the rent. We are talking about recoverable rental charges. The owner can choose to include them in the amount of the rent or to recover them at the end of the year.
For example, condominium charges represent the costs related to the operation of the elevator (electricity, maintenance, etc.), water and collective heating, maintenance and lighting of common areas. indoor spaces, outdoor spaces (garden, car park) and security.
What Profitability on My Rental?
If it is a rental investment, it is also possible to define the rent according to the desired rental yield. Be careful, if the defined rental value is too much above the market, you take the risk of renting your property more difficulty. The real estate agency NYRentownsell advises you to analyze this criterion before even making your real estate investment.
The Rent Reference Index
It indicates the change in consumer prices. This index allows lessors to revalue their rents during the rental. It is based on the purchasing power of the French. The more the purchasing power increases, the more the IRL allows you to increase your rents.
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