Landlords Beware! The Hidden Risks of Property Valuation
Landlords, if you’re about to let your property – this is the easiest way you could be losing A LOT of money.
When it comes to valuing your property, this is a key balance to strike, as you don’t want to under- OR over-value your property.
The perils of over-valuing
Let’s start with over-valuing your property.
If you’re a new landlord, this is an easy mistake to make as you don’t have experience to guide you and there are a few other things that could impact your over-valuation:
- Worries about the outgoings. If you’re a newer landlord, you may be worried about covering the outgoings on your property, perhaps there were more than you were accounting for or your worried about future expenses so are trying to cover your bases
- Renovation costs. If you’ve invested heavily in improving your property before putting it up for rental, you may be hoping to recoup some of that investment via the rent
- Misunderstanding the competition. It could be as simple as looking around at nearby rentals and pricing accordingly – without doing deeper research. For example, another property might be charging that amount because it has an additional bedroom or is closer to a school.
There’s a lot to consider when valuing your property, so it’s not a task to be undertaken lightly – or too quickly!
Ultimately, if you overvalue your property you’re likely to struggle to find tenants. Nowadays, competition for rentals is ferocious, but there is a cost-of-living crisis, so people are naturally looking for the best value. If your property is too expensive, you could find yourself out of pocket because no one is willing to pay for it.
If you’ve got a property coming up to rent soon and you’re interested in working with an agent, book a call by clicking the link in the description below!
The woes of under-valuing
On the flip side, under-valuing is just as perilous!
- Will you be able to cover the outgoings? After all, being a landlord doesn’t mean you’re made of money. Often, landlords have saved in order to afford an investment property and, while they might have some savings to cover any issues in the property, that’s not an infinite resource. If you undervalue your property and aren’t able to cover the mortgage repayments, insurance premiums and any other outgoings on the property – you could find yourself on the slippery slope to arrears and potential repossession
- Too many tenants. Like I said – competition is fierce and people love a bargain, so you could find yourself overwhelmed with requests to view or take the rental on. If you’ve got a day job, that’s a LOT to handle. AND you’re giving yourself the additional headache of having to increase the rent at a later date. Pricing the property right is the key if finding the right tenant
- Too good to be true. It may sound odd, but if your property is in a great area, with good transport links and local amenities, BUT is noticeably cheaper than other properties… You might find tenants overlooking your property – worried that it’s a potential scam or that the photos are not representative of the true state of the property
So how do you get it right?
So now that I’ve really driven home the need to get your valuation bang on, how exactly do you do that?
Well, there are a few ways…
- Do your research. Don’t just give a cursory glance at local prices, really dig in deep so you can understand how values fluctuate around your property and why that is. This IS time-consuming, but it does mean you can more accurately place your property in the context of the area and price accordingly
- Use a calculator. There are online tools that can help you, if you input your postcode and key points about your property, such as the number of bedrooms. However, while this can save you time, it only gives a ballpark figure that might not be QUITE right
- Use an agent. Ultimately, the easiest thing you can do – whether you are a new landlord or not – is work with an agent. They work on the frontline of the industry and so are incredibly up-to-date when it comes to valuation and will be able to advise you the best price to appeal to tenants and cover your expenses. Just a reminder, you can book a call via the link in the description below, if you want to discuss working with an agent.
There you go – who knew valuation was SO important?
