Before you decide to buy an investment property, you need to know what you can set for rent. If the numbers don’t allow you to be profitable, you shouldn’t buy property. But how can you know what you can set to rent before buying?
One option is to use a rental estimation calculator to help you know the potential lease for the property provided and explore other rental prices in the area. But how exactly this estimate of rent is calculated?
Variables to consider when counting leases
These are some of the most important variables that will affect the number of rent that you can set:
- Consumer demand. Our economic system functions according to the law of supply and demand. When supply is high and demand is low, prices tend to shrink; There are some people who are interested in products and many competitors who try to provide it. When low supply and high demand, prices tend to rise; There are many vibrant bidders and some sellers to serve them. Thus, in the environment with low supply, prices tend to be higher. Leasing is lower in the area with many vacancies and opportunities for tenants.
- Crime level. The lower the crime rate of a certain area, the more interesting, and more and more people want to stay there. You cannot affect this variable directly, but you can choose to invest in the environment with a low crime rate and / or decrease. Also, pay attention to the crime rate of violence vs. crime without violence; Violent crimes are far more serious and will likely have a considerable impact on the rental price.
- School accessibility. Likewise, people often assess the quality of the overall environment based on the quality of the school district. If the school is good, it will attract more wiser and responsible parents and more young families to the area; It will also produce a local population that is more educated and more responsible. The better the local education system, the higher the rental (in general).
- Property age. You also have to take into account the age of the property. For some people, older houses are charming and unique – but are always equipped with a downside. Older houses with older interior features tend to be less reliable, poorly isolated, and in many eyes, worse. Newer house, or one with modern renovation, will allow you to fill more rent.
- Number of bedrooms. One of the most famous variables affecting the rental price is the number of bedrooms related to the property. The studio apartment will be cheaper than 2 bedrooms, which will be cheaper than 3 bedrooms, and so on. More bedrooms can accommodate more people – and provide more space.
- Number of bathrooms. Similarly, you can justify charging more rent if there is an additional bathroom available. The house with 2 bathrooms or more is always valuable than just a house that is comparable to only 1.
- Total Footage Square. Of course, you also need to think about a total square recording. In fact, many rental estimators use this as one of their most important variables; If you rent a ballparking for the property, you can see a typical price per square foot for property in this area.
- Appeals of grass and curb. Don’t underestimate the impact that can be done by the sidewalk attraction. If your exterior property is more friendly and more beautiful, it will attract more tenants who are willing to pay more. The grass is well maintained and the fresh paint coating outside can allow you to charge more in rent.
- Additional facilities. The more your property has to offer, the more you can justify the charging of rent. If you have a washing machine and dryer in place, spacious parking, and other interesting bonuses, people will be willing to pay you more every month.
- Other requirements. The fewer restrictions you have, the more you can charge rent too. For example, if you allow pets, you will draw a broader demographic spectrum – and you will be able to justify charging more.
