With its low crime rate, many outdoor activities, and a high median household income of $112,250 (versus the national U.S. median of $75,149), it's no wonder Upper Marlboro, MD, got an "A" grade from Niche.com. So, despite the median rent here ($1,742) being higher than the national median ($1,268), the review site still ranked the town as one of Maryland's best places to live.
With those qualities, being a landlord in Upper Marlboro could be an excellent, high-paying job. However, to be successful in the game, you must conduct a rental analysis.
Join our team at PMI Experience as we delve into rental real estate market analysis must-knows.
What Is a Rental Analysis?
A rental analysis is one of the most crucial real estate property income strategies, providing insights into a property's potential return on investment (ROI). It involves a thorough evaluation of the following:
- The property's historical values
- The property's current and future expenses, risks, and related costs
- The local market trends in the property's location or area
- Economic indicators
- The rental prices of comparable properties
Comparable properties, or "comps," are those similar to the property you own or want to buy in terms of location, size, characteristics, and age. You must factor them in during your rental analysis to learn how much they charge and establish a fair rental market rate for yours.
Why Is a Rental Analysis Crucial?
One of the most vital property investment tips is to set fair and justifiable rental rates. A rental analysis can help with this since it'll give you the numbers you must work with to establish how much rent to charge and collect for your property. It contributes to investment return enhancement by helping you avoid overcharging or undercharging.
Avoiding Exorbitant Rental Rates
You'll put off prospective renters if you charge far more than what comps do or what's reasonable for your property. After all, who'd want to pay more rent if they can pay less to live nearby that offers amenities and qualities similar to your property? Even if they decide to rent your property, its high cost can make them less likely to stay and renew the lease.
Preventing Bottom-Line Losses
Undercharging rent can significantly lower your bottom line. Remember: You won't pocket your tenants' entire rental payments. You'll have to use part of them to pay for expenses like:
- Mortgage loan (if you have one)
- Income and property taxes
- Insurance
- Property maintenance
As Investopedia.com advises, you should set aside at least 1% of your property's value for repairs and upkeep alone.
Maximize Investment Returns and Income With Rental Analysis
Rental analysis is invaluable to determining a property's return on investment and income potential. So, always conduct it before investing. You should also perform it regularly throughout property ownership to account for current market trends.
If you're looking for an investment property in Upper Marlboro, MD, our team of real estate and property management experts at PMI Experience can help. We're proud to be part of PMI, a nationally recognized brand with over 300 property management locations nationwide.
Call us today so we can provide you with a free rental analysis!
