Before you set rent for your property, it's not uncommon to perform a rental analysis to ensure you're setting 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 conducting one.
We've created a list of things you'll learn and even more information about where to find resources to improve your property management skills. Read on now and get ready to set prices that work for yourself and your tenants.
What is a Rental Analysis?
A rental analysis is a report that provides investors with information and data about the property market in their area and its status. It can be used to improve an investor's portfolio and understand how the property is performing against others in the same market.
Another common reason to use a rental analysis report is that it can help determine the rent price you need to provide tenants when they sign a contract to move into the property. 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 best as the rest of the neighborhood. When people are looking for a rental property, they don't just consider the property.
They also take time to survey the surroundings and ensure it works for them and anyone else that 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:
- Educational institutions in the area for children
- Great location
- Restaurants and grocery stores
- Transportation accessibility
If you're looking for property to invest in, it's best to avoid areas where the street is congested or the presence of distressed properties and walkways. No one wants to live in a place that seems 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. This means choosing them wisely.
Therefore, a home with the same landscape as yours or at least the same number of bathrooms and bedrooms would be beneficial. The analysis will show you how you should price your rental property.
3. Information Used to Estimate Rent Cost
Equipped with the in-depth information you need about your rental property, you can begin to estimate the rent cost of the property. For example, you might base the rent on the square footage of your home and other considerable factors.
Things such as the amenities you offer could also influence the cost.
What Does a Rental Analysis Tell You?
You can learn several things from a rental analysis, including 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.
Contact Chicago Property Management and check out our blog for more valuable resources and information.
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