Comparative Market Analysis
Aside from renovations and showings, there is one more step an investor can take to give them assurance about maximizing rent yields at their investment property. A Comparative Market Analysis, commonly referred to as a CMA, is a report that analyzes properties in a certain area and can estimate Fair Market Rent within a neighborhood or town.
There are a number of factors to consider if investors want accurate results. This list may seem a little long, but every facet of a property is important when talking about maximizing rent yields. Data points for a CMA include type of unit, neighborhood, size, number of bedrooms and bathrooms, age, style, views, condition, and lot size or acreage. This is another reason why renovations are such a crucial aspect of ensuring that investors are maximizing their rent because renovations can positively impact the results of a CMA.
In an article written by Gemma Smith titled, “How to Effectively Carry Out a Rental Market Analysis in Your Local Market” from Azibo, she sums up why a CMA is such an appealing asset for investors to take advantage of, “This analysis ensures pricing strategies are responsive to market conditions, balancing the need for competitive rental prices to attract tenants with the goal of maximizing rental yield. Furthermore, ongoing CMA enables investors to adjust rent prices in accordance with market trends, ensuring the investment remains lucrative over time.”
A final piece of the puzzle when it comes to maximizing rent yields at investment properties is the investors’ ability to raise rents every year. Aspects of the housing market such as supply and demand, overall economic health, inflation and operating costs are all well within the right of the landlord when it comes to incrementally raising rent for a tenant each year. These incremental increases are much more preferred by tenants than the possibility of having to move and pay significantly more for rent in another unit or property. Investors could rely on a comparative market analysis to provide sound reasoning for that slight rental increase.
In Conclusion
Maximizing rent yields is a key to succeeding as a real estate investor. If an investor is not taking full advantage of every property within their portfolio, struggles can occur. Using the three methods of a well thought out renovation process, multiple showings that highlight the best aspects of the property and surrounding area and performing a CMA that supports the rental price an investor is looking to set are surefire ways to get the most money possible out of a rental property. By themselves, these are all viable strategies that can help an investor, but when used in conjunction with one another, an investor is setting themselves up for long-term success in the industry across all of their properties.