A rental analysis, or rental market analysis, is an important first step whether you're considering buying a property or offering an existing one for rental. It involves some research and a simple mathematical equation.
The main calculation involves determining the average rental per square foot of properties in the area and then multiplying this by the square footage of the property under study.
This will help determine the type of rent you can charge for the property, keeping the purchase price in mind. It's important to consider other factors while you make up your mind. These include nearby amenities and growth in the area.
Read on to discover why this process is so important for property investors.
1. Calculate the Best Rental Pricing
Analyzing the rental real estate market helps you set an attractive and fair rent price for your property. If you charge more than comparable homes in the surrounding area, you'll have difficulty finding tenants.
Price it too low, and you'll lose out. In this way, a rental analysis can help you calculate whether you can realistically expect to cover your mortgage and other expenses, like property taxes, by renting the property.
In some cases, installing cost-saving measures, like solar power, can help you decrease your costs so you can charge slightly lower rent.
There are no laws governing how much landlords may charge for rental properties. This makes setting profitable rents much easier, but you must remain in line with prevailing trends to attract the right tenants.
2. Rental Analysis Helps With Marketing
With 11 Fortune 500 companies based in Northern Virginia, the real estate market is stable in this area. Rental vacancy rates have increased to 6% in recent times, though, which means you'll face a little more competition for tenants.
Marketing your property effectively is the best way to ensure you find the best fit for your investment home. Analyzing the renter demographic in the area will assist you in targeting people who are likely to find your property appealing.
It will also help you discover what types of upgrades and amenities local tenants find most attractive, and which advertising platforms might work most effectively for your market.
3. Make Strategic Decisions
When buying a new investment home, a property valuation will reveal its current worth. A rental analysis helps you predict its future earnings.
Thanks to this, you can more accurately calculate your return on investment, and plan a way forward according to prevailing market trends.
Make Profitable Decisions for Your Investment Properties
Compiling an accurate rental analysis is a complex and often intuitive process. You can certainly benefit from expert guidance to ensure you get accurate results.
A seasoned local property manager can help you with every aspect of assessing a property's rental value and help you plan a strategic marketing campaign.
PMI Loudon offers an extensive range of property management services in Northern Virginia. We can assist you with a rental analysis, property marketing, and pricing strategies.
Let us help you make the best decisions for your North Virginia investment portfolio.
