Determining Rental Value & Price of Your Properties – 7 Expert Tips

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It might surprise you to learn that houses in the United States now cost over $350,000 on average. As a result, it’s become more difficult than ever before for first-time homebuyers to find a place of their own.

Those who currently own property, though, will likely find that their home is worth exponentially more than what they purchased it for. This is why many people are choosing to rent properties they own out to tenants.

In order to be a successful landlord, though, you will need to understand how to set the right rental rate.

To help you get started with assessing rental value, we’ve created a brief guide that can help you avoid common issues.

Let’s dive into everything you need to know about how to price a rental property.

1. Consider the Overall Value of the Home

When looking to set your rental rate for your tenants, you’ll first want to take into account the overall value of the home. This can be done by considering recent sale prices for similar homes in your area, as well as the current market conditions.

You’ll also want to make sure that you’re charging a fair rate for your area, as you don’t want to price yourself out of the market. In general, it’s recommended to set your monthly rental rate at approximately 1% of the total value of the home.

To clarify, let’s assume that you own a property that is worth $500,000. You would want to charge approximately $5,000 per month in rent. This number may be higher or lower depending on other factors that we will explore below.

2. The Condition of the Property

If your home is in need of repairs or improvements, you may need to charge a lower rental rate in order to attract tenants.

However, if your property is in good condition and is move-in ready, you can likely charge a higher rental rate. Unfortunately, even a large home that is situated in a great location can be difficult to rent out if it is in poor condition.

In some cases, you might not be able to rent the property out to tenants until you make certain renovations. For instance, if there are wiring or plumbing issues that could pose a safety threat, you need to take care of these.

The good news is that this will inadvertently increase the condition of your property.

3. Consider Changes There May Have Been in the Local Market

You’ll also want to take into account any changes that may have happened in the local market. You can likely charge a higher rate if there has been a recent influx of renters in the local market.

If there has been a decrease in the number of renters, you may need to lower your rental rate in order to attract tenants. It’s best to assess the local market from year to year to determine if you should adjust your current rental rate.

Interestingly, many landlords are resistant to change when it comes to lowering their rent. The truth is that you may simply need to do so if you notice that you cannot find new tenants as easily as time goes on.

4. The Amenities of the Property

If your home has unique features or amenities, you can most likely charge a higher rate. Conversely, homes that are rather plain might not be able to attract tenants who are willing to pay top dollar. Be sure that you keep this in mind when moving forward so that you can recognize when a lack of amenities becomes an issue.

5. The Length of the Lease

The length of the lease is also a factor to consider when setting your rental rate.

As you might guess, you can often charge higher rates for shorter leases. This is simply due to the fact that you may experience a vacancy within a shorter amount of time after the lease expires.

If tenants are willing to sign longer leases, it’s customary to lower the monthly rate. Vacancies can cost time and money, and it’s better to get less per month for a larger number of months than deal with tenant acquisition every quarter of the year.

6. The Number of Bedrooms and Bathrooms

This attribute is not to be confused with the total size of the home.

Regardless of how large the house is, the total number of bedrooms and bathrooms will play a large role in what people are willing to pay. For example, imagine that you own a 5000-square-foot house that only has three bedrooms and two bathrooms.

This would likely be a less attractive option to tenants compared to a 4000-square-foot house that has five bedrooms and four bathrooms.

7. Work With a Professional Evaluator

As you might guess, there’s a lot that goes into setting the right rental rate for your property. If you’re not sure where to start, it might be a good idea to work with a professional evaluator. A professional evaluator will be able to help you determine the right rental rate for your property based on all of the factors mentioned above.

When searching for a professional to work with, be sure to consider their past reputation. This will allow you to gain insight into their level of expertise and customer service. The good news is that a quick Google search is often all it takes to find the information they need to know.

Finally, you should choose somebody that you feel comfortable communicating with. This will help ensure that you find a professional that is ideal for your situation.

Setting Rental Rate Doesn’t Have to Be Complicated

It might seem difficult to handle the rental rate of your properties, but it’s easier than you may expect it to be. Be sure that you keep the above guidelines in mind so you can avoid problems you may have encountered.

Want to learn more about what we have to offer? Feel free to get in touch with us today and see how we can help.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.