According to ZipRecruiter, the average annual salary for a landlord in North Carolina was $72,135 as of July 2024. In rare cases, that salary exceeded $120,000 a year.
While these numbers show promise, they assume that you're doing a proper rental analysis so you can charge your tenants the correct amount. Make rent too high, and you can scare off prospective tenants. Charge too low a rent, and you may struggle to generate a profit on your investment.
Here are some property investment tips on generating accurate rent estimates.
1. Understand the Local Rental Market
The first thing every landlord should do is research the local rental market. This is important for rental market insights and understanding what people look for when browsing homes.
Economic indicators such as employment rates and industry growth can tell landlords a lot about the health of the rental market. If people aren't making money, they won't buy or rent new properties.
Population trends can also influence demand for certain rental properties. A growing number of young professionals may mean a higher demand for smaller, more affordable apartments. They're much less likely to rent entire houses on their own.
2. Conduct Thorough Property Comparisons
A good way to generate accurate rent estimates is through comparisons with nearby properties. Ideally, they should be similar properties that offer much of the same amenities as your own. You should also perform this as part of the initial investment property analysis before you make a purchase.
Make adjustments based on differences in your properties, your location, and additional amenities. You may also wish to charge more or less based on seasons or other factors.
Use reliable data sources for accurate comparisons. Platforms such as Zillow and other real estate websites allow you to view rental prices with ease. You can also discuss pricing with local real estate agents.
3. Calculate Rental Yield and Cash Flow
Rental yield calculation starts by subtracting annual expenses from the annual rental income. You then divide that number by the purchase price.
Your cash flow is the amount of money left over after you've paid all property-related expenses. You want it to exceed expenses to have a positive cash flow.
Take, for example, a gross rental income of $1000. If you spend $800 on things like mortgage, property taxes, and maintenance costs, then that leaves you with $200 cash flow.
If your cash flow isn't high enough, you may need to cut back on certain expenses or raise the cost of rent.
Perfect Your Rental Analysis
A landlord's rental analysis should take in a variety of factors, including the local market, comparable properties, and their own cash flow. That way, they can charge an amount that brings in profit without scaring off potential tenants. You'll also have more to work with for maintenance and future renovations.
PMI Amazing Spaces provides property management services for Charlotte, NC, and its surrounding communities. We're part of a nearly 20-year-old franchise that's constantly growing and gaining more experience. Schedule a consultation today to learn more about how we can help you earn more with your property.
