Newport Beach, CA, is an excellent choice for investors with high rental rates and consistent real estate appreciation. However, events over the last few years have shown how unpredictable the housing market can be.
In this light, it makes sense to conduct thorough research before investing in a new property or setting a rental price for an existing one.
Performing a rental analysis is the best way to assess the current rental market. Read on to discover what you can learn from this exercise, so you can focus on the relevant information while compiling it.
What Is a Rental Analysis?
A rental analysis is a report centered around data about an area's rental property market. It's used to understand a property's performance against the competition in this market.
You can use it to improve your current property portfolio by maximizing your future return on investment based on your monthly and annual costs.
What to Include in Your Rental Analysis
A rental analysis is like a risk assessment for investors. You can discover three important things using a rental analysis:
Neighborhood Research
Location is everything in real estate, so it makes sense to investigate every aspect of an area before investing. Not only will it impact the future value of an investment property, but it can also determine how desirable a home is for tenants.
Things to focus on during your analysis include:
- Schools in the area
- Nearby attractions
- Conveniences like grocery stores
- Accessible transport
- Demographics
Avoid areas with high levels of distress, e.g., congested streets, run-down properties, and high crime rates.
Rent Price Comparisons
To attract tenants, you must set your rent prices in line with the norm for the area. Look into the rent prices for at least three other rental properties.
Be sure to compare properties that are similar in terms of square footage, number of bedrooms and bathrooms, and amenities. This will help you market your property at a price that people are willing to pay.
Costs vs. Expenses
Once you have an idea of the possibilities for a property, you must view these in line with your expected expenses. These may include:
- Mortgage payments
- Insurance
- Property taxes
- Maintenance and repairs
This comparison helps you determine areas for cost savings to maximize your ROI. Your research into current rental rates may also guide you here in terms of the most effective improvements to help you increase your rent while keeping costs low.
Hire a Property Manager for Optimal ROI
A rental analysis is a vital tool for landlords. It provides valuable insights into the prevailing rental market. By analyzing this information, you can calculate an optimal rate for your properties, understand rental markets, and make the best decisions for your rental business.
PMI First Choice can help you navigate the intricacies of compiling this data. Our team is backed by over 20 years of experience in California real estate, and our range of services helps ensure your rental units remain financially viable.
Get on board to enjoy the benefits of our expertise and personalized service.
