Before you determine what rent to charge for your property, it’s common to perform a rental analysis. This will ensure you’re getting the right price. If you’ve never heard of a rental analysis as a property manager, you might be wondering what you can learn from running one.
We’ve created a list of things you’ll learn as a landlord to improve your property management skills. Get ready to set prices that work for your rental properties and your tenants.
WHAT IS A RENTAL ANALYSIS?
A rental analysis can be used to improve an investor’s portfolio and understand how the property is performing against others in the same market. It is a report that provides investors with information and data about the rental property market in their area.
Another common reason to use a rental analysis report is that it can help determine the rent price you need to provide tenants when you’re marketing your property. One way tenants search for rentals is by the rental price being charged. As you’re conducting a rental analysis, there are several things to consider as the property manager, including:
- Monthly property expenses
- Annual property expenses
If you want to ensure you get the full scope of the area, survey at least three other properties compared to yours. Now that you better understand a rental analysis, here’s what you can expect to learn from conducting one.
1. Better Understanding of the Neighborhood
Your home will only perform as good as the rest of the neighborhood. When people are looking for a rental property, they don’t just consider the property but they also consider the surrounding area.
They will take the time to ensure it works for them and anyone else who might be living with them. Some of the things that you’ll find from the evaluation of the neighborhood include, but aren’t limited to:
- Schools and other educational institutions
- Great location
- Restaurants and grocery stores
- Transportation accessibility
- Population demographics
If you’re looking for property to invest in, it’s best to avoid areas where distress is present. Things to look for are congested streets or the presence of distressed properties and unkept yards and walkways. No one wants to live in a place that is perceived to be unsafe.
2. How Your Property Compares to Similar Properties
As we mentioned above, you need to list at least three other properties to compare your prospective property too. Choosing wisely will benefit you and your future tenants.
The three primary characteristics of the comparable properties that should be very similar are bedrooms, bathrooms, and square footage. Other amenities are beneficial, however, they’re secondary to the three above. The analysis will show you what is currently on the market as well as what has been rented recently. This will show you how you should price your rental property.
3. Information Used to Estimate Rent Cost
Once you are equipped with the in-depth information you need about your rental property, you can begin to estimate the rent to charge for the property. You can then adjust the price up or down depending upon the amenities you offer which may influence the cost.
WHAT DOES A RENTAL ANALYSIS TELL YOU?
You can learn several things from a rental analysis, including what is the right price for your property and how it compares to others. Conducting one is crucial to ensure you’re investing in the right properties. It also helps to ensure your vacancy time is reduced and your rental property does not stay on the market too long and get stale.
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