Home’s Rental Value : Having a rental property provides you the chance to generate a consistent income each year. However, it is crucial that you determine the appropriate rent amount before renting out your house. According to market rates, property owners must calculate the exact rental value for their property. You may secure a good rental bargain and maintain your financial stability by pricing your rental property correctly based on your area.

 

How should a property’s rental value be determined?

The value of a property is ever-changing. Therefore, it must be calculated on a regular basis. Property valuation include determining a property’s market worth, rental value, and selling price using a variety of techniques. Knowing your rental property’s true market worth might help you bargain and obtain the best offer.

Find out how much rent other landlords in your region are charging for houses with comparable size, number of bedrooms, age, etc. Determine the rental rates and occupancy rate for the properties that most closely resemble your own. It should be noted that certain property owners could demand excessive rent for unoccupied homes. To ascertain the rental worth of your home, you can speak with expert property evaluators or utilise an online property assessment calculator.

 

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Why is the value of a property important?

Setting the rent has a direct influence on your finances because, for most people, rent may be a sizable source of revenue. Renting a house sometimes entails making necessary repairs or renovations to make the home livable for tenants. It is also vital to take into account the monthly mortgage payment and any other expenses, such as taxes, that you may incur if the house had been empty. This will enable you to establish a fair price that is in accordance with market prices.

It should be noted that a higher rental price may deter potential renters. A decreased rental value, however, may result in losses for the landlord. Knowing a property’s true rental potential by taking into account a number of elements can therefore yield high returns.

 

Things to consider when calculating your property’s rental value

Rental rates

• The annual rental returns of a house may range between 2.5% and 3.5% of its market value.
• Example: The market value of a house is Rs 45 lakh. Then, the monthly rental value is calculated as:
• If rental yield is 2.5%
• Rs 45 lakh X 2.5/100 = Rs 1,12,500 per year
• Monthly rental value = Rs 1,12,500/12 = Rs 9,375
• If rental yield is 3.5%
• Rs 45 lakh X 3.5/100 = Rs 1,57,500 per year
• Monthly rental value = Rs ,57,500/12 = Rs 13,125
• Thus, the monthly rental yield ranges between Rs 9,375 and Rs 13,125.
• Make sure you set the rental amount based on the prevailing rental rates of similar properties in your locality.

 

Home’s Rental Value : Market value

Market value is the current worth of the property, which is determined by a number of elements like location, impending infrastructure developments, etc. A property’s value may increase in a neighbourhood where a metro project is planned, which will raise the rental rate. Alternately, the market value may decrease as a result of things like a slowing circle rate, stalled infrastructure developments, increased pollution, etc.

 

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