You can't take your rental profitability for granted, no matter how good a deal you achieved when buying your rental property. Real estate requires a systematic approach, including a comprehensive analysis to determine how you will make money from this new asset.
If you are new to rental analysis, continue reading for some landlord tips. Here, we'll explain the four key steps to take when assessing your investment properties in Richmond, VA.
1. Do Some Market Research
Rental analysis begins with a comprehensive look at the Richmond market. It will give you data that will shape many of your decisions about your property, including the rental rate.
You should examine the area's average rental prices and the 12-month trend. You should also investigate vacancy rates to get a feel for current demand.
Real estate websites and MLS (Multiple Listing Service) can be helpful resources. A local estate agent team can also provide you with some invaluable advice.
2. Focus on Return on Investment Figures
When conducting a rental analysis, be as objective as possible about your profits. You can do that by focusing on one single metric: your ROI.
ROI is the return on investment or the money you get back for every dollar you spend on your property, including expenses and other costs. Once you have that, you will have a baseline you can use for any future purchasing decisions.
You'll know your ongoing expenses and the expected rent you'll yield from each property. That will help you make profit-driven decisions, which is the smartest approach if you want a successful real estate portfolio.
3. Have a Process for Evaluating Properties
Your rental analysis must be objective. It's tempting to examine potential properties to make your decision personal. You might like the space or location, assuming that makes it a good investment.
You need to take a step back and think of it from a real estate point of view. So, there are criteria you can use to measure each property. What are the likely costs? What is the likely rental rate?
How long will it stay on the market before you secure a tenant? List as many criteria as possible for the most comprehensive decision-making process.
4. Know Your Legal Costs
The rental analysis is more than assessing properties, rental rates, and profit.
It's also about understanding some of the intricacies of real estate that could unexpectedly raise your costs. An excellent example is regulatory compliance.
Get to grips with some of the legal requirements in Richmond for landlords and look at the costs and risks of some of those regulations. It's also worth talking to a real estate expert who knows this area.
Rental Analysis: Maximizing Your Profits
Rental analysis is vital if you want to turn real estate into a career. It's the best way to help determine profit opportunities throughout your property portfolio. Use these four steps to guide you.
At Renters Warehouse, we've developed a reputation as a prompt, professional team with exceptional local market knowledge. Discover more about how we can help you here.
