When you’re deciding how much you’re willing to pay for a property, you have to know what that home is worth. The same applies to selling a home – how will you know what your investment’s value is?
Establishing a rental value works the same way. You need to understand what matters to the Boston real estate and rental markets, and what good buyers and tenants are willing to pay.
You never really know what a potential tenant or investor is going to value. Some people will pay more for the right location, but others are thinking about size and amenities over the neighborhood.
Whether you’re establishing a rental value or a sales value for your Boston home, there are a lot of things to consider. We know that having the best information at your fingertips is the only way to make a smart decision, so we’re providing six factors that really influence a home’s value.
You may have six completely different factors that you believe drive a smart pricing process. We’d love to hear them. But first, take a look at what we think matters the most.
1. Location Affects Boston Home Values
You’ve heard the enthusiastic mantra: Location, Location, Location! There’s a reason that agents are always talking about location. Real estate and property management are very local industries. Whether you’re buying and selling or renting out a property, the location of that home is likely to be one of the driving factors when it comes to value and price. People aren’t just moving into a home – they’re moving into a neighborhood. Some neighborhoods, like some homes, are worth more than others.
You’ll find there are a lot of consumers who search for properties based solely on location. They’ll conduct online searches based on neighborhood name or zip code. So, to establish the right home value for your property, you need to really understand where it’s located. Dig into the neighborhood dynamics and demographics.
Here are some of the things that will get you the highest home values:
- Good schools. Always check your school district. They tend to be zoned in ways that don’t always make sense. Your property could be assigned to a school that’s different from the properties just across the street. Think about higher level education, too. Is your property close to a college or university campus? That’s going to mean a different pool of tenants and dramatically different home values.
- Easy access to commuter routes. More people continue to work from home but there are plenty of tenants and buyers who don’t have the option to work from home, and they want to be close to where they spend so much of their time. They won’t want to fight traffic or spend hours in the car, so homes that are close to employers and highways will usually have a higher value.
- Proximity to shopping, dining, and entertainment. Homes that are more remote won’t have as high a value as homes that are close to all the things that contribute to a higher quality of life.
Before you price your property, educate yourself on the particulars of your unique location. It’s going to make a big difference.
2. Competition and Home Values
The current state of the local Boston real estate market will also influence a home’s value.
Take a look around at what’s available and what’s in demand. If you’re on the right side of that equation, you’ll likely earn a lot more on your property than someone who is holding the type of property that the Boston market doesn’t need.
Let’s say you’re renting out a suburban home with three bedrooms, two bathrooms, an attached two-car garage, and a fenced backyard. That sounds like a dream rental home – something that renters will be eager to want. But, if there are 200 homes just like yours on the market and the rental trends are swinging more towards new construction condos in the city – you won’t have the high rental value you might have expected.
However, if your rental home is unique and there aren’t nearly enough of them to meet demand, you’re going to be able to charge more.
Local economic and population shifts will also impact the way the market influences home values. Pay attention to demographics, employment conditions, and local real estate trends. If people are moving into the area and the population is growing, you can expect your home value to rise. If there’s suddenly a mass exodus, you’ll have to prepare yourself for a lower value. The market plays a huge role, and so does the competition you face within that market.
3. Size Matters When it Comes to Home Values
Every buyer or renter will have different size requirements when they’re looking at properties, but there are a few common themes that can help you establish a home value. A two or three-bedroom property is going to earn more than a studio. While a seven-bedroom home with 4,000 square feet will clearly have a higher home value, it may take a longer time to rent that property out, so you’ll be looking at some serious vacancy loss.
Size will determine what you can charge, who you can rent it to, and how long it takes to get someone moved in.
Floor plans and layouts also make a difference. You could have a large five-bedroom house on two stories but if there’s only one bathroom, your home’s value may not be as high as a property with fewer bedrooms and an extra bathroom.
You have likely seen a lot of price-per-square-foot data. That will make sense in a sales listing, perhaps, but it also leaves a lot out of the equation. Don’t limit yourself to looking at that number.
4. Condition, Amenities, and Age
How old is your home? Is it in good shape or can you see its deterioration?
Some people have romantic ideas about owning or renting older homes. However, it’s pretty easy to expect that newer and well-maintained homes will lead to higher values.
A property that’s already in great condition will require less maintenance. You won’t have to invest a lot of extra resources just to bring it up to market-ready condition.
Tenants looking for modern conveniences and upgrades will be willing to pay more. A home with energy efficient appliances and hard surface flooring, for example, will always earn more than a home with aging appliances and cheap carpet that’s been cleaned too many times. Consider making the necessary upgrades that will increase your home value. There’s no need to invest in a full renovation. Just make the place stand out with some fresh paint, new floors, and better lighting.
Consider your amenities as well. Covered parking, outdoor space, and in-unit washers and dryers all lead to higher rental values in Boston investment properties. You’ll find that some people may be willing to pay more for a home in an HOA community that offers a pool, fitness center, clubhouse, and playgrounds.
5. Pet-Friendly Properties and Rental Value
Pet-friendly properties are essential to investors who want to earn as much as possible with their Boston rental home. You’ll be sure to attract a larger pool of tenants when you allow pets, and you’ll also find it’s easier to charge more in rent. Most tenants are willing to pay a pet rent every month, and you can collect a pet fee. Allowing pets also keeps vacancy to a minimum and increases response rates during the marketing period.
Pet fees are typically $200 or $300 per pet, and it’s always better to charge a pet fee instead of a pet deposit. A deposit needs to be refunded if it is not used. When a pet fee is collected at the beginning of the leasing period, it can be kept through and after the tenancy. Pet rent is typically between $25 and $50 per month, per pet.
When you want to increase the value of your rental home, one of the easiest things you can do is open it up to pets. With a strong pet policy in place, you’ll protect your investment against the potential risks that come with animals.
6. Technology Increases Boston Home Values
One of the fastest growing trends is smart home technology. People want to be connected when they move into a new home. Video doorbells, for example, are enormously popular. You can see who is standing outside your front door even if you’re not home. Tenants are also fond of strong Wi-Fi connections and the ability to integrate smart devices like Apple’s Siri or Amazon’s Alexa. Being able to program your coffee maker, thermostat, and appliances from a swipe on your phone is a huge benefit.
There are pros and cons to investing heavily in technology. However, if you’re considering what to charge for your Boston property, think about what you have to offer in terms of connectivity.
These are six of the factors that are weighed while establishing an accurate value for your home. Whether you’re selling or renting out an investment property, please contact us at Platinum Realty Group. We’d love to help you establish an appropriate value for your Boston property.