Real estate investing has been one of the most profitable enterprises since people owned private property. Those who invest in rental properties find it extremely lucrative as well but realize that it requires a lot of work as well.
This entails remaining competitive in your particular location. That means understanding market trends and how your property (or one you are considering buying) stacks up.
This is where a rental analysis can be very helpful. Keep reading to find out how this tool can help you make an informed decision about your property and the best ways to market it.
What Is a Rental Analysis?
A rental analysis provides a comprehensive assessment of an investment property as it relates to the local real estate market. The main goal is to give the property owner information about a variety of factors that allow them to understand earning potential. It also can help make their rental competitive among prospective tenants.
What Information Does a Rental Analysis Examine?
Rental analyses look at two main things. These are potential rental income and expenses.
First, a rental analysis surveys similar houses or units in the area. This includes a close market analysis and rental prices for properties with similar square footage.
Besides the market, neighborhood, and square footage, it also looks at amenities. A home or apartment that includes a washer and dryer or community swimming pool will have the potential to fetch a higher rent.
Finally, a rental analysis will take into account proximity to things like shopping, restaurants, parks, outdoor activities, and public transportation. These features can help bolster the asking rent among potential tenants.
Looking at rental income is hugely important, but so are likely expenses. Many people buy properties--or decide to rent ones they already own--with only rental revenue in mind. But failing to be realistic about how much it will take to keep a unit rented can be a major blindspot.
A rental analysis will give you a meticulous breakdown of taxes, insurance, and any mortgage expenses. These will obviously vary among properties but are vital to consider.
The other major expenses a rental analysis will look at are maintenance and repairs. This includes regular upkeep, such as HVAC, electrical, plumbing, landscaping, and pest control, among others. Again, the details will vary among properties.
It also will give you a breakdown of how much you should plan to spend on repairs. This includes those related to regular wear and tear on the property as well as emergency repairs. It will give you a more realistic outlook so that you can better plan for income minus needed expenses.
Schedule a Rental Analysis Today
Now that you understand how a rental analysis works and the benefits it affords, you can determine if it is the right tool for your investment. A qualified management company can further advise you on its uses.
Since 1994, First Rate Property Management has provided the highest quality services to real estate owners and investors in the Boise housing market. We offer a range of services, including marketing, tenant screening, accounting, bookkeeping, and more. Reach out to us to schedule a free rental analysis today.