When compared to the national average, the Fair Market Rent prices in Kansas City are noticeably higher. According to the FMR, a studio will run a person $762, while a 4-bedroom will cost $1,569. These prices will vary based on the neighborhood and condition of the property.
However, some myths tend to go around about rental valuation. Some people may think that landlords are the ones who stand to profit from every change they make. This type of misinformation only hurts the relationship that is meant to build between landlord and tenant.
Here are some myths debunked about your rental price.
Landlords Completely Control the Rental Price
The most commonly believed myth is that landlords have complete control over how much they charge for rent.
Yes, landlords can set their rental prices to a certain extent. However, how much they charge will vary based on market conditions, the going rate on their property, and local demand. Part of the rental analysis an investor runs is property valuation which lets them know how much they can charge.
Lower Prices Attract More Tenants
Landlords may think that they can lower prices as a rental pricing strategy. While this may increase the volume of applicants, it doesn't mean that they're all qualified or reliable. It often just means more work for the landlord or property manager to background check them all.
On the flip side, a lower rental price may signal that there are problems with the property. Renters should check for things like structural issues or problems with the utilities.
Higher Prices Equal More Profit
When running a property business, higher prices seem like a way to earn more money. There are a couple of problems with that thought process, though.
First of all, some states restrict how high you can set your prices. It's important to know these laws to maximize your potential rental income.
Secondly, pricing too high will drive away new applicants. It may also limit lease renewals.
Instead, always aim to get a proper rental valuation and look at what other properties in your area are charging.
All Rentals Price the Same
Something to keep in mind is that rental prices are not expected to be the same throughout Kansas City. Just because you saw one house priced a certain way in one part of town does not mean that is normal or the standard.
Instead, you need to look at factors such as the neighborhood, the property's amenities, and what kind of businesses are nearby.
Rental Valuation Done Right
The key to proper rental valuation is becoming as well-informed as possible. Look into the local market to find out what your range is. Don't be afraid to mark up your property if you're offering amenities that others aren't.
SCUDO provides real estate brokerage and property management in the Johnson County area. We can help you at every stage of the process, from analyzing deals to managing your renters. Reach out today if you have any questions and to get a free rental analysis.
