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The Rental Market Analysis: Everything You Need to Know
You want to buy a rental property or already have a home that you want to rent. But, before you do, you want to make sure it will actually be profitable.
How can you tell?
An RMA is basically like a report card for potential properties. It assesses things like location, average rent prices in the area, and other important factors that will affect your bottom line.
This process allows landlords and investors to avoid buying or renting out an underperforming asset - aka a money pit - and losing their shirt in the process. So how does one go about conducting an RMA?
Keep reading for everything you need to know about this crucial step in the rental property process!
Table of Contents:
What Is a Rental Market Analysis?
The Purpose of a Rental Market Analysis
What Is a Rental Market Analysis?
A rental market analysis (RMA) is a report that helps landlords and investors assess the rental potential of a specific property. It’s created by researching comparable rental properties and amenities, evaluating the location, and calculating the average rent prices.
This research and data will clearly display whether a potential property will be cash flow positive or negative and whether it is the right investment for you or worth renting out.
An RMA is similar in concept to a comparative market analysis (CMA), which is typically done by real estate agents for listing clients.
Both reports are created by evaluating multiple comparable properties and calculating important factors, like price per square foot. However, an RMA is created specifically for landlords and investors to determine the investment potential of a market or property.
The Purpose of a Rental Market Analysis
As a landlord or real estate investor, you know that it’s important to do your due diligence before making any big purchase – especially an investment property. One of the best ways to evaluate a potential rental property is to order a rental market analysis (RMA).
An RMA is a valuable tool used by landlords to evaluate potential long-term rental investment purchases and vacation rentals.
What is in a Property Management Market Analysis?
A thorough property management market analysis will include research on your competition, local housing and economic trends, demographics, and area rental analytics. One of the services we provide for our clients is a free rental market analysis.
A market analysis provides useful information about the current state of your rental market. It also gives you the information you can use to benchmark your property management company against the competition.
A market analysis allows you to know more about what trends are happening in your area and answer questions like “Am I charging too much? Too little? What do I need to do to make money on my properties? How much new construction is planned or in the works and how will it affect me? Is the neighborhood safe? Is it close to public transportation?
These are all important factors that will affect the rental potential of a property. Once you have gathered all of this information, you can begin to calculate the average rent prices in the area.
This will give you a good idea of what you can expect to charge for rent. It is important to remember that the average rent price is just a starting point.
You may need to adjust your prices based on the conditions of the property, location, etc. Finally, you should always consult with a professional property manager before making any final decisions.
A rental market analysis is a valuable tool that can help you make informed decisions about your rental property investments. However, it is important to remember that it is just one part of the decision-making process.
You should always consult with a professional before making any final decisions about your property.
Tips for Successful Renting
Are you thinking about renting out your property?
Whether you're a first-time landlord or a seasoned pro, there are always ways to improve your rental business.
Check out these tips for successful renting:
1. Know Your Market.
Before you start renting out your property, it's important to do your homework and understand the local rental market.
What are comparable properties renting for?
What amenities do tenants value?
By understanding the market, you'll be in a better position to set competitive rent prices and attract quality tenants.
2. Screen Your Tenants Carefully.
It's important to screen your tenants carefully to ensure they will be good tenants. Get references from previous landlords, check their credit history, and make sure they have a steady income.
The better your tenants, the less stress and headaches you'll have down the road.
3. Maintain Your Property.
Keep your property in good condition to avoid costly repairs down the road. Regularly inspect the unit and make repairs as needed.
By maintaining your property, you'll also attract higher quality tenants.
4. Be Responsive to Tenant Needs.
Tenants will appreciate a landlord who is responsive to their needs. Whether it's a maintenance issue or something else, try to address tenant concerns in a timely manner.
This will help build good will and keep your tenants happy.
5. Have a Good Lease Agreement.
A well-written lease agreement will protect both you and your tenant. Be sure to include important clauses, such as those regarding rent payments, late fees, and property damage.
A good lease agreement will help prevent problems down the road. By following these tips, you can be on your way to successful renting.
Just remember to do your research, screen your tenants carefully, and maintain your property. With a little effort, you can be a successful landlord.
Key Takeaway: To be a successful landlord, it's important to understand the local rental market, screen tenants carefully, and maintain your property.
Conclusion
A rental market analysis is a crucial tool that landlords and real estate investors use to evaluate potential long-term rental properties and vacation rentals.
If you're looking to invest in rental property, or even just determine the rental potential of a specific area, then you need a Rental Market Analysis (RMA). This valuable tool will help real estate investors assess the profitability of a potential investment, by taking into account important factors like location and average rent prices. So don't wait – contact VHS Property Management today to get started on your RMA!