Property investment in San Antonio can be a great source of passive income or a way to save for retirement, but what happens when your home stays vacant for weeks or months at a time? Often, a property will remain unoccupied because the rental rate is too high: figuring out what rent to charge, even with a single occupancy rental, is more than just trying to cover your mortgage and expenses. This is how a lot of landlords find themselves in hot water! The best way to know if you’re charging too much is to conduct a market analysis.
Here are some key points to understanding what a market analysis is and what factors to consider when comparing your properties to others. Partnering with a property management company means having a wealth of expertise in market analysis at your disposal, saving you not only time—but stress, too!
The best way to understand your market and determine if you’re setting your rates too high is by juxtaposing your investment property to similar homes in your neighborhood:
1. Price by the Square Foot
Savvy renters in San Antonio are going to look at the breakdown of the overall rent by the square foot. This is much like making a price-per-ounce comparison at the grocery store: yes, the half-gallon bottle of milk may be cheaper, but what about the cost by volume? The same goes for property rentals: if you find your property is averaging much higher per square foot compared to the comparable properties you’ve seen, then you have a standard by which to start judging your property and whether you need to lower the rent.
Expert Tip: Comparable properties should be roughly the same size as your property by square footage, have the same number of units, and should be within a few blocks of your property—no more than mile radius from you. The proximity to your location is vital because values can change from block to block, so the closer to you, the better!
2. Fees and Deposits
Another factor you may not have considered is if your application fees and security deposits are too high: comparable properties are a great way to gauge what is typically charged or expected of the renters in your area. While properties in one neighborhood of San Antonio may prove to be different than yours, understanding the differences and applying them could help you set better fees and deposits that will entice more applicants and keep your home occupied.
3. Offered Amenities
Comparable properties are more about square footage and proximity, but amenities are essential in determining whether you’re charging too much for what you have to offer. If a single unit rental in your San Antonio neighborhood offers an in-unit washer and dryer while you don't and is charging equal rent, it would be a safe bet that you should be lowering your rates!
Amenities Can Increase Your Value
As demonstrated, amenities can be a great way to gauge what your rental offers versus comparable properties in your area. Investigating amenities not only gives you a better idea of how you should structure your rent but also gives you excellent insight into ideal upgrades. Lowering your rent to keep vacancy down shouldn’t be viewed as a failure, but it’s a tricky line to toe between occupancy and profiting from your investment. You may also find that you’re offering more amenities than similar properties, but are maybe just not advertising them as well or possibly overvaluing them for your neighborhood. Here are some amenities and options you should consider when undertaking a rental rate overhaul!
1. Pet Paw-licies
This is a free and straightforward way to increase your pool of applicants while keeping your rental rate as-is. A rental property that doesn’t allow pets can be a deal breaker, so merely allowing pets (if you don’t already) can increase the perceived value of your home.
Expert Tip: If you currently allow pets and have that built into your rent, you could consider reducing your rent and then charge both a security deposit for the pet and a monthly fee to account for potential damages. This way, you’ve reduced rent for non-pet owners while offering those with pets a place to live.
2. The Dreaded HVAC
Energy bills can be a pain to keep up with, especially in the blistering San Antonio heat! Depending on what you offer in terms of air conditioning, you may want to raise or lower your rent. If you have central air and comparable homes only offer wall units to keep things cool, then you have a serious advantage! One way to keep your rate as-is while attracting more tenants is to include utilities in the rent, advertising with “utilities included.” If your cold-air offerings can't keep up with the competition, then consider lowering the rent.
How a Property Management Team Can Help
Understanding the rental market in your area can be tough to keep up with, which is why a property manager can be your secret weapon to keeping your properties occupied! With a property management partner, you gain a seasoned team whose job is to know your neighborhood inside and out while gauging the value of your property from year to year. On top of this expert know-how, Real Property Management Campanas supplies you with a marketing team that can better advertise the amenities that set you apart from your competition. Whether you're just beginning your investment property journey or need a fresh set of ideas to push your property to the next level, contact Real Property Management Campanas today and get your FREE rental property analysis!