Avoiding Common Pitfalls in Rental Valuation: Tips for Investors

Avoiding Common Pitfalls in Rental Valuation: Tips for Investors

Did you know that Nashville, TN, grows by around 100 new residents each day? Among 56 metros with a population of at least one million people, Nashville ranks the 10th highest in growth.

Music City is famous for, well, music! But, it's also a great place where investors can generate passive income.

Because so many people move to this city, there is ample opportunity for real estate investing. Before you start renting out your property, consider a rental valuation. Keep reading to learn common mistakes and how to avoid them.

Overpricing or Underpricing Your Rental

One of the most common mistakes you can make when conducting a rental valuation is overpricing or underpricing your property. By comparing similar properties in the area, you should have a good idea of the average price point.

Aiming too high above this number can lead to longer vacancies. If you have a high rental price with no market interest after a week, consider dropping the price.

A small adjustment can save you money in the long run because you can rent out your vacant units faster.

Underpricing your rental is just as damaging to your cash flow. You might not make enough money to keep your investment properties in the green.

Comparing Your Property to Dissimilar Properties

To get an accurate rental value, you need to find properties that are similar to yours in features, size, and location. A property that is dissimilar to yours isn't going to help you settle on rent prices.

If your property is especially unique, you might have a hard time pricing it. Get as close as possible when trying to make a comparison.

You might have to look a little outside your location to find a property similar in size and amenities. If you go this route, be sure to factor in the market differences, if there are any.

Having Inadequate Property Insurance

Not having adequate property insurance could put your real estate career in jeopardy. It's easy to get coverage wrong when you don't know the true value of your property.

Sufficient insurance coverage is based on your property's value. An adequate policy will protect your property from natural disasters and accidents. It can also cover risks associated with renting to bad tenants, such as property damage and defaulting on paying rent.

Owners could be forced to pay for problems out of pocket. A property manager can help you review your rent price to find the right coverage for your needs.

Get Your Rental Valuation Right

An accurate rental valuation for your Nashville, TN, property should be one of your top priorities. If you fail to know the value of your property, you can't set a competitive rent price or choose the best insurance coverage.

Evernest is a property management company that can help you value investments by comparing them to similar ones. Since 2008, we've grown to now manage over 16,000 properties.

Our team is hard-working and has years of property management experience. We know how to turn your investments into profits, starting with a rental valuation. Get started today with our free ROI calculator.