In February 2022, the average rent in Miami jumped to $2,850. Some Miami landlords likely tried to charge hundreds of dollars more than this. If they did, they probably struggled to find tenants.
Other Miami landlords likely charged hundreds of dollars less than this. If they did, they missed out on a large chunk of their rental income. They may have ended up unable to sustain themselves.
But how could these landlords have learned what to charge? They could've performed a proper rental analysis. Read on to learn the steps for performing this process.
What Is a Rental Analysis?
A rental analysis, short for rental market analysis, is a way to assess rental property performance. That is, it's a way to estimate how your rental property will perform in a certain market. It can also help you learn the appropriate rental prices to charge.
Rental Market Analysis: Four Steps
To perform a rental market analysis yourself, you'll need to gather certain sets of data. You'll also need to do some calculations. Preferably, you should do this before you invest in a rental property.
Step 1: The Neighborhood
Look up the data for different neighborhoods. Consider how comfortable tenants would feel living there. The more comfortable tenants will feel, the more profit you'll generate.
Here are some factors that the best neighborhood shouldn't have:
- Dirty streets
- High noise level
- Multiple vacant properties
- Remote location
- High crime rates
Step 2: Rental Comps
Rental comps are properties comparable to the ones you want to purchase. Determine the details of your dream properties based on the following:
- Lot size
- Building size
- Building age
- Amenities
- Condition
- # of bedrooms
- # of bathrooms
Once you have determined these, go on a real estate marketing site. Find three or more rental properties that are similar to yours. Get the monthly rental prices of each of these.
Step 3: Rent Per Square Foot
Calculate the rent per square foot of the three or more properties. Get the average of all of them. This will give you a rough estimate of the rent you can charge per square foot.
Step 4: Rental Price Adjustment
The per-square-foot price you calculated above may not be enough. Landlords usually have to adjust their final rental price based on amenities and vacancy and occupancy rates.
For example, if the property you want has a pool, you can probably charge more. If the area has a high vacancy rate, you may need to lower your rent costs.
Get a Free Rental Analysis
After you've performed this rental analysis, you should know if a property in this area will be profitable. You should also know the appropriate price to charge for rent. In this way, you should find success with your retail investment.
All the work that you put into this process will be well worth it. But you may not want to bother. If so, enter your rental property address into the bar on this page.
Also, if you need help with aspects of property management, try our services. At Allegiant Management Group, we offer a full range of property management services.
