What Is a Rental Analysis—and How Can a Rental Analysis Benefit Your Kona Property?
07 November 2019
Hawaiian Dream Properties
Setting the right rental rate for your property isn't an exact science, but it does require some analysis. Studying the rental market and understanding what renters look for in a Kona rental property helps landlords set the right price from the start.
Whether you have a short term vacation rental or a long-term property, your "goldilocks" rental price—not too high, not too low—attracts your just-right tenants. They'll feel at home, and you'll generate the income you need for your long-term financial plans when you finally decide to retire in Kona.
So, what is a rental analysis? How do you find the information you need? Let's look at why the rental analysis process is critical to your success as a rental property owner on the Big Island.
What Goes into a Rental Analysis?
It can be tempting to pick a monthly rental rate that's close to the homes around your rental property and call it a day. However, you could end up with a price too low or too high for your specific property, and you'll lose money either way.
Comparing prices to the competition is part of the rental analysis process, but it shouldn't be the only deciding factor for your monthly rental amount.
A rental analysis is a robust process of studying multiple factors that determine your rental price.You don't have to spend weeks assessing your property's worth—but you do need to understand what goes into a rental analysis to set the right price. With the internet at your disposal, even undertaking a rental analysis as a potentially long-distance landlord is still feasible.
How Is the Neighborhood?
In a city the size of Kona, the neighborhood surrounding your rental property matters! Renters look for homes with easy access to the highway, beaches, and parks. They want restaurants and shopping within a comfortable walking distance. Close access to great coffee wouldn't hurt, either! Factor in your proximity to local attractions when you're considering the rental rate.
What's the Vacancy Rate?
The number of vacant rental homes compared to the number of occupied homes affects the rental price of your property.
How many rental homes are in the area?
How many of those homes have tenants?
When there are more occupied rental homes than empty rentals in the neighborhood, that can boost what you charge for your property; it's a desirable neighborhood for renters!
How Does Your Property Compare?
If the home next door charges double what you charge for rent, be sure your property compares closely to that home before raising your rate!
Your rental price depends on the condition of your rental property and what it offers to tenants. When comparing rental prices to other nearby properties, choose homes with similar features. Consider:
The number of rooms; including bathrooms.
If there's a garage (or none).
Does your competition have a fenced yard—or no yard?
The total number of square footage.
The amenities your Kona property offers relative to its neighbors.
The condition of the investment home.
If you want the monthly rent for your Kona rental property to match nearby homes, you might need to consider some property upgrades to justify raising the rent. On the reverse, if you outprice your competition with every update in the book, that merits an examination of your rental rate as well.
What Is Your Property's Value?
Your property value should also factor in your rental price.
How much did you pay for it?
What's the current market value?
What are the annual property taxes and other fees?
Make sure the monthly rent price makes sense for the value of the home: renters won't pay a high price to live in a property that costs more than it's worth—unless you live in silicon valley.
How Do You Use a Rental Analysis to Improve Your Income?
The rental analysis is a valuable tool if you already have a property. It's also a beneficial process when you have your eye on a new property to add to your portfolio. Ultimately, the rental analysis of your investment home in Kona helps you regain your peace of mind: when you're charging the right rental rate, vacancy decreases.
Performing a regular rental analysis for your Kona home helps you stay competitive! You don't need to do it every year, but it's a good "gut-check" to make sure you're on track toward your financial goals—and your own Hawaiian dream.
Your rental analysis will help you keep up with rent adjustments by surrounding properties. You can also get free insight into the top amenities renters enjoy in your area. This converts to considerable savings if you decide if you need to adjust what you offer or want to make upgrades.
If you're considering a new rental property, perform a rental analysis before you buy it. Evaluate the neighborhood, nearby properties, and compare the analysis to your financial goals. The rental analysis helps you decide if a property is a good fit for your long-term wealth and retirement—or if you should keep looking for a better property.
Property Managers Have the Skills You Need for Analysis!
Are you wondering where to find the information you need for a thorough rental analysis? It can be hard to get the right information—especially if you don't live near your property.
Don't worry; your Big Island expert property managers have everything you need! We know the importance of setting the right rental price for your rental property. Hawaiian Dream Properties starts with a rental analysis for each of our new owner-partners and their properties. With this information, we know what tenants want in your area—and what kind of management works best for your Kona property! We'll guide you to the best price to help you meet your long-term financial goals on the Big Island. Let's get started with your very own free rental analysis!