Home sales by real estate investors are on the rise; however, before taking part in real estate investing, it's essential to know how much you'll profit. A rental analysis could be the key to understanding your rental profits before placing a dime into a property.
It would help if you had a rental analysis to determine the rent price and monthly expenses. Moreover, you'll decide whether you could lose money on your investment.
Here's more on why a rental analysis is a must before real estate investing.
Determine Rent Price
Rental prices are skyrocketing throughout Oregon, so it's best to ensure your rent is competitive. Many factors go into determining the price of rent.
Consider the location. Can you charge more for rent if your rental property is in a sound school system or next to public transportation? Does your rental have access to great shopping or have amenities like EV chargers and a pool?
A rental analysis looks at what others are charging for rent in your area. Is there a way to get your price lower? Do you feel you could charge more based on the competitiveness of the real estate market?
Different types of properties can also help you decide what to charge. A house can give you a higher rental income rather than a small apartment.
Figuring out the rent price determines your rental income, cash flow, and rental profits. A property management company can also help you control expenses.
Monthly Expenses
A rental analysis will assemble your monthly expenses, including taxes, utilities, and profits you'll need to save for maintenance. Moreover, consider your mortgage payment and any property management fees. You must be able to charge enough rent to cover your monthly expenses to decide whether the property is worth your investment.
Moreover, does the property need work? Many people take on a real estate investment property only to realize it's full of problems later. You'll want to avoid spending large amounts of money on windows, siding, carpeting, and appliances, which can affect your cash flow and passive income.
Profitability
In real estate investing, you'll want to know your profit margins. Is the property worth a good return on your investment?
Many suggest an excellent return on real estate investment is between 8 and 12 percent, but it's best to aim higher.
A good return on your investment will help you figure out if you can afford more properties. Profitability will also affect how much you make from your passive income investment. Additionally, if you are looking to flip the property, these formulas will assist you in knowing how long you have to hold on to a property.
Benefits of a Rental Analysis
Benefits of a rental analysis include determining the rental price and figuring out your monthly expenses. You will also want to know how much profit you'll make!
A property management firm in Oregon can help you control costs to increase your profitability. Contact us today and let us help you manage your real estate investment.
