Hamilton County saw more population growth in the last decade than any other county in Indiana. Seasoned property investors know that with population growth comes higher demand for rental units and more competition for renters.
Does that mean you should increase rent in Noblesville year over year? Not exactly.
Performing a rental analysis is the best way to determine your place in the rental market. Because the rental market changes rapidly, an annual rental analysis is key.
Read on to learn more about conducting a rental analysis and why we believe you should do it once a year.
Changes in the Market
As a metropolitan suburb, the Noblesville market intersects with the Indianapolis market. Last year, Indianapolis saw the highest rent increase in the entire nation. This can have a ripple effect on rental prices in surrounding areas, but that doesn't mean you should start increasing your monthly rent by 30%.
Many Indianapolis renters will turn to cities like Noblesville in search of affordable housing. Overpricing your rental property means losing out on this population of commuters.
Changes in Property Value
In today's real estate market, your property is likely to appreciate in value as the years pass. However, renters tend to measure value differently than buyers. Because they don't stand to profit off the property, renters are interested in things like:
- Square footage
- Proximity to transportation
- Proximity to shopping and other desirable options
- In-unit amenities (e.g., dishwashers, laundry machines, etc.)
- Property amenities (e.g., gyms, pools, etc.)
- Property condition
If you want to maintain or increase your monthly rent, you'll need to perform regular maintenance. After all, making your property rent-ready isn't a one-time job. Before you perform your rental analysis, take care of any maintenance issues that are unresolved.
Prioritizing Tenant Retention
The best return on investment comes from tenants who renew their leases each year. What prospective landlords may not realize is that it costs less to keep a tenant than it does to fill a vacancy.
A thorough rental analysis will take into account the rising costs a landlord must take on. For example, if property taxes or the cost of maintenance rise, you may need to raise the rent to provide the same level of quality to your tenants.
That said, you don't want to needlessly outprice your current tenants. Always perform a rental analysis before lease renewals roll around. If you find that you need to raise the rent for the next leasing term, offer an explanation and work with tenants to reach an agreement.
Get an Accurate Rental Analysis from PMI Indianapolis
When the cost of rent is rising around the state, it's tempting to increase rental prices each year. The reality is that a steady increase doesn't always yield the best return on investment. Conducting an annual rental analysis is the best way to determine a reasonable rental price that tenants will actually pay.
At PMI Indianapolis, we do more than provide expert rental analysis. We offer customizable rental property management services. Contact us today to learn more.