To ensure your continued success as a real estate investor, you must know that you are making the maximum available profit from each of your properties. One of the best tools for doing this is a rent survey. It should be done on any new property and as a part of managing the properties you currently own.
In addition to telling you the current rental rates for the area, it can give you occupancy rates, identify which features are attracting tenants, and indicate where the rental rates for the area are heading in the foreseeable future. A rent comparability study is an essential part of determining the value of a property you are considering for purchase.
Rent surveys by appraisal companies
Rent surveys are typically completed by an appraisal company because a thorough rent survey is needed for assessing the inherent worth of a rental property. You want to be sure you use the services of an appraisal company that has extensive experience in rent surveys on your type of property and that they know the area. Collecting and compiling the necessary information for a thorough and reliable survey is not easy. You need someone who knows what they are doing.
Here are some of the variables that will go into a rent survey:
- Average rent for the market area and the current demand for rentals.
- Typical lease duration: The amount of time you can expect a tenant to rent your property is key to knowing the amount of rent you can expect.
- Assumptions and disregards: This applies to commercial rental properties. For the purpose of the rent survey, the assumption is a clause stating something assumed to exist with a hypothetical tenant. The disregard is something that will not be taken into consideration when determining the rental value, such as any improvements made to the property by the tenant.
- Type of property: The rent of a property will vary based on whether the property is used for commercial or residential purposes.
- Anchor tenant: Another vital aspect is whether or not there is an anchor tenant that will attract customers to the location, who will then be shopping at other stores in the same location.
DIY rent surveys
Some investors complete their own rent surveys on apartments and residential rentals by collecting the data themselves and inputting the information into a spreadsheet for comparison. If you do the rent survey yourself, be sure you are comparing truly comparable properties.
You may want to enlist the services of a local Realtor or broker who specializes in rental property to obtain the information and help you with the survey.
Market trends and research can also be found at:
- The National Apartment Association
- Your local housing authority
- Investment advisory brokerage firms such as Berkadia, JLL and IRR
- National Multifamily Housing Council (NMCH)
- Paid data and analytic services like the Urban Land Institute (ULI), Axiometrics and CoreLogic
For excellent regional information take a look at:
An online search will bring up additional resources. Try a search that is specific to your investment market or property location.