From the desk of Gunn property management, Leesburg, FL:
If you've been looking at your rental property and wondering if you're charging the right rent, you've probably been thinking about all the factors that determine value. How do you know how much you can charge? It's important that you focus on the rent you can actually get, as opposed to the rent you want: the best way to do that is to perform a rental analysis.
A rental analysis is a tool our Leesburg property management pros use to assess the renting potential of a property. We consider a lot of different factors when we're doing research into an investment property! In today's blog, we're going to share some tips on what goes into determining what your rental is really worth!
Q: 'What Is a Rental Analysis?'
Gunn property management, Leesburg, FL: Landlords, real estate investors, and property managers all use rental analysis as a tool to determine the potential profitability of a property. It's useful for setting the rent on a property that you own, but it's also a great way to assess the potential of an investment property you're thinking about buying.
A rental analysis involves seeing how your rental property stacks up against comparable properties in the area (often referred to as "comps") to determine how much you can reasonably expect your property to rent for. There are quite a few different aspects, factors, and metrics that must be taken into consideration, and a lot of data to sift through! That's why we always recommend having your rental analysis done by a professional Leesburg property management company.
Q: 'What Goes Into a Rental Analysis?'
Gunn property management, Leesburg, FL: As a landlord, the biggest benefit of a rental analysis is being able to zero in on the right amount to charge for rent. As Forbes points out, this is often one of the most challenging aspects of renting a property, because setting the rent too high can lead to extended vacancies, while setting it to low reduces your overall ROI (return on investment).
When conducting a rental analysis of your property, these are the main factors that our Leesburg property management experts would consider:
Evaluate the Neighborhood
Location is always the first consideration in real estate, and a rental analysis needs to include a thorough assessment of the surrounding neighborhood. Evaluating a neighborhood includes looking at the location of nearby businesses, parks, schools, and other amenities, as well as walkability, access to public transportation, and parking. Many other neighborhood factors come into play as well, including the condition of homes, vacancy rates, and historical trends in rent and home value.
Identify Comparable Properties
Once the neighborhood as a whole has been evaluated, it's time to zoom in on some specific rental properties. Look for comps that are similar to your property, and find out what they are renting for. Comps should ideally offer square footage, the number of bedrooms and bathrooms, lot size, and condition similar to yours.
Calculate Price per Square Foot
Once you've found properties that are similar to yours, the next step is using the rental price and square footage of these properties to calculate the price per square foot. This number can be used as a general guide to arrive at the correct price per square foot of your own property.
Adjust Based on Amenities
Depending on your neighborhood, your rental analysis may have to rely on comps that have somewhat differing amenities than your property (rentals with identical amenities are sometimes hard to find). An important final step of performing a rental analysis is adjusting for amenities, including amenities within each unit, as well as community amenities in the case of multi-unit rentals.
For More Than You Current Rental
It is worth noting that these tips on how to approach the research for finding your ideal rental rate cover more than just your current investment property! These are the same metrics we use when helping the landlords we serve to determine if the next property they're interested in acquiring will work in their financial favor.
Mastering these skills now—or working with someone who can provide them for you—is crucial to ensure you keep your current and any future investments profitable.
If You Need More Guidance, We're Here for You!
When it comes to property management, Leesburg landlords, you deserve the best. At Gunn Property Services, we offer a wide range of tools for landlords and investors to maximize the profitability of their rental property.
One of these tools is our FREE rental analysis! Simply type in the address of your rental property, and we will generate a full report that will help you zero in on how much you should be earning. During these confusing times, it's absolutely crucial that you are able to maximize the rental income you should be earning from your investment property.