All property investors obviously hope to make a reliable annual income from renting out their home. But there’s a danger in setting your own rental rates. Last year, two-thirds – that’s 3.8 million DIY landlords – actually lost money from their property investment. Whether they were unable to compete with the market rate, or were afraid to anger their tenants, or simply underestimated their worth, they all left money on the table.
Within commercial real estate, the average rent in Albuquerque was $818 in January 2018, with the trend climbing upwards. New residences continue to pop up, indicating the market demand isn’t as tight as nearby Sante Fe. In fact, occupancy rates are slightly down, hovering at 94.51 percent. That means there’s room for pricing competition, and if you price your rental property effectively, you can make a steady profit.
For a major city, the rent increase in Albuquerque has been modest, and prices are still far more affordable than other capitals. That means overcharging is still very possible, and those inflated prices can leave your rental empty for months. In summary, overcharging because you’re basing your rental prices on a Craigslist ad can run your savings dry.
However, there currently aren’t any rent caps in New Mexico, as in the neighboring state of California. Between leases, you can keep raising the rent on a unit as long as you give current tenants the due notice of 30 days. All that to say, there’s room to negotiate what your New Mexico rental property is truly worth. If you were one of the 3.8 million that failed to make a profit last year, there’s hope.
Obviously, you want to charge more than your mortgage, but you also need to charge enough to keep your rental property’s appliances, finishes, and carpeting clean and up to date. Single-family homes will always earn more for the privacy they provide, but accurate rent estimates will key to this balance. And with every month of vacancy costing you 8.3 percent of your potential yearly revenue, it’s important to get it right.
There are data-driven online tools to gauge what position your property holds in the Albuquerque market, but an online tool can’t judge the living experience of your property the quality of your handiwork. Any DIY landlord should know that simply spot checking the prices of other online listings isn’t true in-depth market research. You can try a “test rate” for a few weeks and tally the responses.
In the meantime, consider what features can add to your rental price:
- More bedrooms and bathrooms
- More square footage
- Lenient pet policy
- Close or covered parking
- Good location
- Amenities
- Appliances (washer, dryer, etc.)
- Upgrades
- Shorter lease lengths
- Furnishings
- Storage
All of these assets are also likely to bring down your vacancy rate, which is the easiest way to keep making money. By fostering a positive relationship with great tenants and getting them to renew their lease, you’ll have payments year-round.
A property manager can evaluate your property’s interior and curb appeal, making recommendations to get the most bang for your buck. They’ll also maintain your property so its value is consistent. A property manager considers your personal expenses to help you plan how to make it all back and then some. They’ll screen for quality tenants, then enforce automated rent collections with no grace periods, swiftly followed series of communications to notify the resident when they don’t make payment. It takes roughly ten percent of your rent income and no time out of your day.
So while being a do-it-yourself landlord can fail to make a profit, hiring a property manager actually pays for itself quickly. Real Property Management Albuquerque will help you make the most money without the hassle. Contact us today for a free property assessment and get the right price for your investment property.
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