The global pandemic and rising inflation rates have each taken their own toll on property markets across the US. This has presented challenges for those looking to buy homes and find rental units to live in. But for a savvy property investor, it could also represent an exciting and lucrative opportunity.
The problem is that at the moment, markets are constantly in flux, so it can be tricky to know exactly when, where, and how to invest. That's where a well-timed rental market analysis can help. Read on to learn how to conduct one and the benefits this can bring.
What Is a Rental Market Analysis?
This is the process of researching a given area to determine whether it will be profitable to purchase a rental property there or not. By looking at current conditions and recent trends, it's possible to create a reasonably accurate forecast of how the market will behave in the near future. It should be noted that this kind of market analysis will only be of use to you if you're planning on investing in a residential rental unit or a vacation rental.
How to Perform a Rental Analysis
To get a good sense of how much you can stand to earn from a rental property in a particular area, you'll need to look at several factors. First, take in the neighborhood as a whole.
Do you think it's going to be attractive to renters? Is it safe, conveniently located, and does it have good amenities? Here you're making an assessment of how easy it might be for you to find tenants for your apartment.
Another piece of information that will help you determine this will be how the overall market is behaving at the moment. Is there a lot of demand currently?
Next, you'll want to look at property prices. How much do properties cost to purchase, and how much are tenants paying for rent?
To do this, you'll want to gather data on a number of comparable properties and find an average amount. Once you've got this information, you can calculate the price per square foot of these so-called comps. Finally, you'll adjust the average rental price per square foot for amenities.
Armed with all of this information you'll be able to see how much rent you can charge and in turn, how much money you can stand to make. From here, it's up to you whether or not you think it's a savvy investment.
Your Rental Analysis Calculator
If this all seems like more work than you're currently able for, then perhaps a property management company could be of help. As experts in property management in Philadelphia, we've got the knowledge and experience to help you make a quick and accurate rental market analysis.
Get in touch with a member of our team today to see how we can help.
