Over a third of all people 35 years and younger are homeowners, according to data published by The Zebra, a leading insurance comparison site. However, many millennials are currently unable to afford a house and prefer renting as an alternative.
Suppose you're one of the lucky few who have managed to buy your own property. In that case, you may have considered renting it out for some extra income. Renting out your property is a great way to provide housing for other individuals as well as generate passive income.
Here's how to perform a rental analysis to maximize your income as a first-time landlord.
Conduct an Investment Property Evaluation
The first step is to conduct an investment property evaluation. An evaluation involves assessing the property's location, condition, and potential for appreciation. You would most likely perform this assessment before your initial purchase.
After you've purchased the property, you'll want to do a rental property inspection. These are performed before a tenant moves in, during their stay, and when they move out. Inspections help both the landlord and the tenant stay accountable.
Perform Rental Income Calculation
The next step is to figure out what kind of rent you'll want to charge. It's important that your rental income covers all of your expenses, including things like insurance and maintenance.
You can perform rental analysis using an online rental income calculator. These factor in vacancy rates, property management fees, and more.
In general, try not to charge more than what a comparable property charges.
Utilize Real Estate Analysis Tools
One of the best property investment tips for success is to utilize real estate analysis tools. These are key if you plan on investing in more real estate in the future or making changes to your current investment portfolio.
The best tools offer valuable property management insights into the market and help you make data-driven decisions. Some of the more popular ones include PropertyRadar and Mashvisor. You can also follow the local news and make decisions based on what you learn.
Plan for Maintenance and Repairs
Unexpected maintenance and repairs should be taken into account when performing a rental analysis. As a landlord, it's your responsibility to keep your property in livable condition.
You never know when something might break down or when an accident can occur. If you haven't set aside a maintenance reserve, then you may find yourself digging into your savings.
If you decide to allow pets, consider charging a pet fee. This fee can help if the animal does damage that requires repairs.
Perform a Better Rental Analysis
The problem with doing a rental analysis on your own is that you may not have access to the best resources available. One way to get a better valuation is through the help of a property management company that specializes in residential real estate.
Gem Realty Group provides property management services for homeowners in the Fredericksburg, VA area. We can help with tasks such as marketing, tenant screening, rent collection, maintenance, and more. Contact us today with any questions and to tell us about your rental property.
