Indiana ranks as the 39th highest state for rental prices. As a landlord, this means you can charge more for rent. Unfortunately, it may also mean paying higher prices for investment properties.
When searching for investment properties to buy, you must conduct a rental analysis. This analysis will help you see if the investment is a good deal.
But how do you conduct one?
As you search for property in Lafayette, IN, follow these tips to conduct a rental analysis.
Understand the Basics of a Rental Analysis
Rental analysis is a thorough evaluation of a rental property. It's something you do before purchasing it. Its primary purpose is to ensure you get a great return on your investment.
While you can conduct this evaluation yourself, hiring it out might be more effective. After all, do you know how to fully evaluate a property before buying it?
Property management firms assist with every task related to rentals. This includes analyzing properties before purchases.
After performing a rental market analysis, you'll know:
- The right price to pay for the property
- How much rent you can charge
- The cost of operating the property
- How much you'll spend on expenses
The bottom line is you'll discover whether buying the property is wise. You can avoid losing money on unprofitable properties. Instead, you'll have a better chance of making money on the rental.
Gather the Necessary Information
As you look for potential rental properties to buy, gather some information. First, where is the property? The address and location reveal its value and potential rent amount.
Secondly, how much money will you finance? Property financing is available but comes at a cost. Use a mortgage calculator to determine your monthly expenses.
Finally, consider its condition. The property's condition helps determine how much you'll spend on maintenance, repairs, and updates.
Analyze the Information
You can analyze the information once you gather it all. There are two main areas to cover: revenue and expenses.
Begin with property data, including location and area. Evaluate crime rates in the area and look at property values. This evaluation will help you determine how much rental income you'll earn.
Next, investigate the costs. How much is the property? How much work does it need?
Consult an appraiser or home inspector to learn more about the costs. Another way to learn is by contacting a property management firm.
Finally, compare the revenue to the expenses. Is there enough revenue to cover the expenses? Does it barely cover the expenses, or is there a surplus?
You will encounter extra costs you didn't plan for, so keep that in mind as you decide which properties to buy.
Hire a Property Manager to Help
PMI Lafayette is a property management firm you can trust. We offer all types of property management services and have 20 years of experience.
We specialize in expertise and excellence and can help you complete a rental analysis. From there, you can decide if it's a good investment for your business.
Reach out to us today to get started.