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Rental Valuation: A Guide for Investors in Greensboro/Triad, NC

System - Tuesday, June 15, 2021
Property Management Blog

In the past year, home values in Greensboro have gone up 13%. So if you are a homeowner or real estate investor, you may be looking to rent out your properties. By extension, you will want to get the highest value possible for your home or apartment. Performing a rental valuation is an essential first step when making any investment decision.

What does this mean? Simply put, valuation is the process of determining the economic value of a real estate investment. Calculating rental valuation relies on multiple factors and requires specific information on a given property — more on that later.

However, obtaining the accurate value of a property does not always have to be complicated. While every property is unique, knowing what to look out for goes a long way.

This simple rental valuation guide will teach you what to consider when making your next real estate investment.

How to Get an Accurate Rental Valuation and Occupy Your Property

The Greensboro real estate market is thriving. Rents are rising while housing prices begin to decline. These collective dynamics offer the potential for increased yields for the buy-and-hold investor.

The prospect of higher value is enticing for any investor. But before you begin your property valuation, there are key financial metrics you need to gather first: 

  • Mortgage payment: A monthly payment consisting of four major parts; principal, interest, taxes, and insurance.
  • Down payment amount: An initial cash payment that serves as a percentage of the property’s total purchase price.
  • Rental income: Surplus cash flow after paying the mortgage and other expenses.
  • Price to income ratio: This ratio compares a median household price and median household income. It is specific to a given area.
  • Gross rental yield: Found by taking the total rental income for one year divided by the property’s total purchase cost (be sure to include closing costs, fees, and any renovation costs).
  • Capitalization Rate: This metric offers the potential rate of return on a given real estate investment. 
  • Cash flow: Measures the net income produced by a property after netting out all expenses and mortgage payments from rental income.

Each factor plays a critical role in determining your property value. You can read more about these factors here.

Once you complete the rental valuation, you can focus on the fun part — occupying your property.

Many investors choose to work with a property management company to help maintain and fill their properties. Working with a property management company is beneficial for several reasons.

Property management companies maintain property value and assist with finding better long-term tenants. Other services include rent collection, financial reporting, and property marketing.

Property management companies benefit owners or investors who do not have time to manage a property themselves or for those who live far away from their properties.

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In summary, understanding the rental valuation of your property is crucial when making wise real estate investments. Taking into account the metrics listed above will help to do accurate valuations.

The next step is to enlist the help of a well-respected property management company.

HomeRiver Group offers world-class property management for real estate in the Triad area. If you are a real estate owner or investor looking for property management services, contact us today to learn more about our services.