While the Duluth housing market is flourishing, there's a cloud hanging over many investors like yourself. This shadow consists of myths about setting rental prices.
There's a lot of information online about rental valuation, but some of it isn't true. We are here to clear up misinformation and eliminate any confusion you may have about rent prices and how to make a profit.
Myth 1: Rental Prices Are the Same Across the City
Duluth is Minnesota's second-largest city, which means rental prices are going to vary, depending on which neighborhood your property is located in. Many people believe they can simply look at another property in town and base their rental prices on that information only.
Unfortunately, it's not that easy. You will need to evaluate your neighborhood and determine what the price should be.
Consider how close the amenities are to your property. Are there good schools nearby? Will your renters have easy access to shopping centers, public transportation, and parks?
A property that is close to a local school may be more desirable, leading to the ability to charge more.
Myth 2: Only Property Size Determines Rental Prices
It's not uncommon for investors to base their rental valuation solely on the size of their property. There are other factors to consider. For example, your property's condition, included amenities, and age all influence property value.
Let's say you own two properties, house A and house B. They are side by side, the same size, and have the same layout. House A has new wood floors and brand-new appliances.
House B has older features, and the appliances haven't been updated in 7 years. You'll be able to charge more for house A.
Myth 3: Renters Always Get Better Deals in the Winter
Demand for rental properties will vary depending on the time of year and the season. In Duluth, you may think demand will be lower in the winter and you won't be able to make as much money.
However, many people come to the area for winter activities and will pay more. There are dog sled races, skiing, and snowmobiling.
You'll need to consider local events when pricing your rental through the winter. You won't always have to lower your rental rates.
Myth 4: Your Rent Price Is Fixed
You should be very thoughtful and strategic about when you raise rent. While higher prices may be necessary due to inflation or other factors, it's important to keep your overall business and profit in mind.
You also need to be aware that your rental prices don't always have to be fixed. A tenant may reach out to negotiate. It's best to be open to these conversations.
What to Know About Rental Valuation
Owning a rental property requires a lot of consideration. Many of these myths are told as fact, and it can be hard to determine what's right and what's wrong.
Now that you know these common misconceptions, you can make an informed decision about your rental valuation. PMI Lakeshore is locally owned and uses high-tech systems to help you create the best rental strategy.
We are here to support you, just like we've been helping landlords for two decades. Get a free rental analysis here!
