Source – https://www.analyticsinsight.net/
There was a time when rent was estimated manually. You would need to know the worth of your property on the market before applying a percentage of that valuation as your rental rate. Oftentimes, this was not your final rate, and you would need to look around your neighborhood to see what other landlords were charging. Rental listings give you some idea of rates in the neighborhood, but you would need to also consider other factors such as lot size, demand in your area, and various other expenses. The whole process could be challenging for an ordinary landlord without a lot of experience in real estate.
Fortunately, with technological advances, there are quicker ways of arriving at a rental estimate using rental analytics tools. They allow you to quickly respond to market situations that could affect property valuation, both positively or negatively. If you are in the business of property management, these tools make a previously laborious process much easier and more convenient. Here’s what rental analytics can tell you that a manual process may be hard-pressed to match:
Analytics software can take all the variables about your property’s location to give you a better idea of rentals in your area. You may think that a Starbucks opening in the vicinity could immediately jack rental prices up. However, the proximity of homes to certain establishments does not necessarily mean rental rates automatically rise. Often, what influences rental rates is a mix of type and quality of community establishments. The different data points that can be factored into rental estimate calculations can be done by a rental analytics tool and updated regularly.
Impact of Non-Traditional Variables
Besides the traditional factors influencing rental rates, there is now an emergence of new and unconventional data sources that have an influence on rental rates. Some of these are factors like the number of coffee shops within a certain radius, homes, and buildings with swimming pools, the strength and reliability of mobile phone signals in the area, and even Yelp reviews of businesses in the neighborhood.
While these are not the traditional factors when valuing real estate, including them in the equation makes rent estimates much more accurate. With its machine learning algorithm, rental analytics software can be fed this information and can make its best rental rate recommendation that considers all data points.
Areas With the Highest Potential
Advanced analytics can identify areas that are currently undervalued but have the highest potential. This allows landlords greater confidence in setting rental rates. At the same time, potential real estate investors can narrow their search for property knowing the potential return on investment from rental income.
As a property manager, landlord, or potential real estate investor, you want to have the most accurate analyses of the rental market of the properties you manage or are interested in investing in. The information that rental analytics can provide will surely be a very useful tool in your decision process.