The Fort Lauderdale real estate market is finally cooling off. Rebounding inventory levels are giving buyers more options to consider. Rising interest rates are slowing down buyer demand as well.
As a result, the housing market is starting to rebalance into a more traditional one. Sellers are less likely to see their listing turn into a bidding war.
Buyers turned off by home prices and interest rates are opting to rent instead. In a traditional housing market, pricing your home to sell or rent is imperative.
Read on for a comprehensive guide to rental valuation. Explore three tips for rental property valuation that will help you price it out.
1. Sales Comparison
Sales comparison is the most common method used by investors and real estate agents. Here, the analyst looks for common variables to see how much a similar home is rented for.
Location and square footage are amongst the most used variables. The number of bathrooms and bedrooms are other important variables. Clearly, there is a correlation between size and rental amount.
2. Rent Valuation Calculator
There is so much data out there in the real estate market. Industry experts can track recent transactions. They are able to filter by specific variables to tailor their data search.
With all this data, there are calculators to assist investors. For example, this return on investment (ROI) calculator allows real estate investors to determine different outcomes.
The calculator is user-friendly and allows investors to toggle several different variables. The end result is determining an acceptable profit for your rental property.
3. Cost Approach
The cost approach is another simple method for Fort Lauderdale rental valuation. This approach is used when data is scarce. There are few comparable data points to use and the property is not currently generating income.
The starting point is the cost of the property. Next, is a downward adjustment made for property depreciation. Lastly, the land’s value is added back in to determine the value of the property.
Other Approaches for Determining Rental Valuation
There are other ways to determine rental value beyond the cost approach and sales comparisons. Both the gross rent multiplier and income approach are two examples.
The capital asset pricing model is also used by some experts. It is important to understand that these approaches are used in various scenarios. It is not wise to arbitrarily select a valuation approach without knowing the underlying logic behind them.
Reaching out to a property management company is another alternative for determining rental value. They will guide you in using the right valuation approach.
Three Tips for Fort Lauderdale Rental Valuation
You are now ready to value your rental property. There are many effective methods to assess your property.
However, it is imperative to understand what the best approach is based on the data that you have. The income approach or sales comparison approach may not be suitable for your situation.
If you are looking for a Fort Lauderdale rental valuation, contact us today to speak with a professional.
