Before deciding to buy an investment property, you should know what you can charge for rent. If the numbers do not allow you to be profitable, you should not buy the property. But how can you know what rent can be charged before buying?
One option is to use a rental estimator calculator to help you discover the potential rent for a given property and explore prices from other rentals in the area. But how are these rental estimates calculated exactly?
Variables to consider when calculating the rent.
These are some of the most important variables that will influence the amount of rent it can charge:
- Consumer demand. Our economic system works in accordance with the laws of supply and demand. When the offer is high and demand is low, prices tend to shrink; There are few people interested in the product and many competitors trying to provide it. When the offer is low and demand is high, prices tend to rise; There are many anxious bidders and few sellers to serve them. Consequently, in neighborhoods with low supply, prices tend to be higher. The rent is lower in areas with many vacancies and tenants’ opportunities.
- Criminality rates. The lower the criminality rate of a given area, more attractive will be, and more people will want to live there. It can not directly influence this variable, but it can choose to invest in neighborhoods with low and / or decreasing criminal rates. In addition, pay attention to the rate of violent crime against non-violent crime; Violent crime is much more serious and will probably have a considerable impact on rental prices.
- School accessibility. Similarly, people often judge the overall quality of a neighborhood based on the quality of their school district. If the school is good, it will attract the most thoughtful, responsible parents and more young families to the area; It will also produce a more educated and most responsible local population. The better the local educational system, the greater the rent (in general).
- Age of the property. You must also take into account the age of the property. For some people, an older house is lovely and unique, but it always comes with declines. The old houses with the oldest interior features tend to be less reliable, poorly isolated, and in the eyes of many, more prosecutors. A newer house, or one with modern renovations, will allow you to load more for rent.
- Number of rooms. One of the best known variables that influence the rental price is the number of rooms associated with the property. A studio apartment will be less expensive than a 2-bedroom, which will be less expensive than a 3 bedroom, and so on. More rooms can accommodate more people, and provide more space.
- Number of bathrooms. Similarly, you can justify the load of more rent if there are additional bathrooms available. A house with 2 or more bathrooms will always cost more than a comparable house with only 1.
- Total square feet. Of course, you will also have to think about the total square feet. In fact, many rentimmers use this as one of its most important variables; If you are baseball rental for a property, you can look at the typical price per square foot for a property in the area.
- Appeal of Lawn and Bordillo. Do not underestimate the impact that the Bordillo Appeal can have for rent. If the exterior of your property is more welcoming and more beautiful, it will attract more tenants that are willing to pay more. A well-kept lawn and a new layer of paint on the outside can allow you to load more for rent.
- Additional services. The more what your property has to offer, the more you can justify the rental load. If you have washing machines and dryers in place, ample parking, and other attractive bonuses, people will be willing to pay more every month.
- Other requirements. The less restrictions have, the more you can charge the rent as well. For example, if you allow pets, you will attract a broader spectrum of demographic data, and you can justify the load more.