Sure, like everyone who has invested in a rental property, you need to collect as high of rent as possible. On the other hand, maybe a better choice of words would be “to collect as high of rent as reasonable.” After all, you don’t want a potentially long-term, reliable renter to walk away because your price is too high. That’s why you need to complete a rental analysis.
A rental analysis is created by comparing your property to similar rental properties in the area, to determine what the current market rent amount should be. It sounds simple, but it can be challenging. There are multiple items to consider before you choose the best comparison. You will want to find 4-6 comparable properties to gain a fair summation.
Let’s get started.
Location: This is a biggie. You can place the identical rental in two different neighborhoods and see a sizeable difference in rent. Sometimes just a couple of streets away can change the rent. Why?
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- How well-kept are the surrounding properties?
- What school district is the property in?
- Is there neighborhood access to a swimming facility?
- Is there convenient access to parks, hiking trails, shopping centers, restaurants, entertainment, etc.?
- Is there nearby public transit?
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Property size and condition:
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- What size is the property?
- Is there a backyard?
- Is it fenced in?
- Does it include an outdoor living space? Patio? Porch?
- Is the landscaping easy to maintain?
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The rental itself:
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- Is it a single-family home or a multifamily?
- What condition is it in?
- Does it have quality windows?
- How many square feet?
- How many bedrooms and baths?
- Does it have an attached garage, detached garage, carport, designated parking if it’s a multi-unit? (Parking is a significant issue – especially if the property is likely to attract renters with more than one vehicle).
- Are the kitchen and baths updated?
- What condition are the appliances?
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Ok, you get it –there is a lot to consider when creating a rent comp. Sometimes the best place to start is talking to other rental property owners, looking at the ads for available rentals in your area, or getting advice from the real estate agent who sold you the property. Online sites such as rentometer.com, rentrange.com and other sites offer comps, advice, forms, and services for landlords – some free and some for a fee. They can be a great help, but you are still responsible for gathering it together and coming up with your final rental estimate.
Be realistic with your rental price analysis. It’s human nature to come up with reasons why your property is “better” than others to justify an above-market price. Although well-intentioned, overpricing can actually lead to lower income over time due to vacancy costs. Taking a realistic approach based on recent market activity and aiming for a rent that’s as high as reasonable is the winning choice to attract long-term tenants quickly.
Our team at Rentals America is always ready to answer your questions and provide the support you need. Happy Landlording!
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management and we’re here to help landlords navigate the rental market.
