Updated October 31, 2022.
Why do we offer a free rental analysis? It's one of THE most important tools investors need when determining the right rental rate for their Pittsburgh rental properties.
It's so critical to your long-term (and monthly) income that we want investors to have access to it free of charge—but what is it? Why does it matter? Setting the rental rate shouldn't require a process, should it? If it's that hard to pick a monthly rent amount, we're probably overthinking it—or are we?
If you've never used rental analysis to determine the best monthly rent for a rental property, you probably don't know that you're secretly losing money every month. Without the right market information, how can you know if it's time to raise the rent or when to raise it? You can't.
Successful investors know that 'guessing' or picking a rental rate based on your gut instinct isn't an effective way to make the most money from rental properties. Here's why professional Pittsburgh property management companies always recommend applying rental analysis when setting the rent for any property!
What Is Rental Analysis?
Rental analysis incorporates rental market data and the details of your Pittsburgh rental property to determine the ideal rate for the monthly rent collection amount in the tri-state area. Using rental analysis helps property owners see how their rental real estate compares to other investments in the area to apply a price that makes their property competitive—and desirable.
A thorough analysis includes:
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A neighborhood evaluation: What do renters like about the neighborhood? Are there excellent schools, nearby restaurants, and parks? The quality of a neighborhood factors into the amount you should charge for rent.
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Comparisons to similar properties: Are there nearby properties with the same number of rooms and square footage? Finding similar properties helps investors know the going rental rate for competitive rentals in the neighborhood.
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Calculating the price per square foot: How much do renters pay per square foot in a rental property? Go back to your comparison properties and look at the monthly rent and the square footage. If your investment property has more upgrades than competitive properties, renters might pay more per square foot to live in your tri-state rental.
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Adjusting for amenities: You've made some smart upgrades in your rental property to attract quality renters. Adjust your price to account for these upgrades to make sure you recover the renovation costs.
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Understanding vacancy rates: Are there a lot of empty rentals in the area? A high vacancy rate can lower the rent amount for your Pittsburgh property.
With this type of rental market information, gather the estimated monthly or annual expenses for your rental property. While you don't want to set the rate too high, the monthly rent amount must cover your expenses—with money left over as profit!
Why Is Analysis Important?
If that seems like a lot of work to arrive at a monthly rental amount, we assure you as the experts in Pittsburgh property management that it's the right thing to do to build your long-term wealth—but why is it important?
You could pick a rent amount that seems close to other nearby properties and save yourself some work—but you might not make enough money from your property. Other property owners have unique needs and financial goals compared to your own. This is why it helps to price a property based on research and your own outlook as an investor.
When the Rent Is Too High
As a full-service property management provider, we know that vacancy is one of the most significant ways to lose money on a rental property. When renters don't stay, and you have a hard time finding new residents, you lose money every month without rental income.
Tri-state area renters are smart! Just because you aren't doing the right research to price your rental doesn't mean they aren't. Renters won't overpay for a property when they can find something similar to fit their needs for a better price. That's rental market economics in action.
Setting your rental rate too high to try and make more money rarely works out that way. If you're struggling to find a new renter, consider lowering the rental rate. Doing that could improve the interest in your rental home.
When the Rent Is Too Low
The opposite end of the spectrum can be just as bad for your income! Setting the rate too low might help you place a renter faster, but you won't make enough money on your property.
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A low rental rate won't cover your property expenses.
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In the long run, losing money every month hurts your long-term income.
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When you apply rental analysis, it's time and effort well spent to determine the ideal rental rate for your property! You'll attract the right residents and generate the income you need to build your long-term wealth.
Of course, if you don't want to tackle this workload yourself, an expert provider of tri-state property management services can help tackle the task for you.
A Property Manager Sets the Right Price!
If you don't know where to get the information for a thorough rental analysis, our Pittsburgh property management team can help! Rentwell® understands the importance of rental analysis when investors have financial goals to meet with their rental homes and portfolios.
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We have all of the tri-state area rental market data you need to set the right price.
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We can also help you make smart property upgrades to support a rate increase and make more money from your properties!
Ready to get started? Take advantage of our research chops with your free rental analysis!
