Rental prices across the country are on the rise. Inflation and housing demand are two primary factors driving up rent.
In Washington D.C., rental prices for studio and one-bedroom apartments are up 23% and 15% respectively. A two-bedroom apartment costs you more than $3,200 on average.
As a real estate investor, you can take advantage of this market. The key is calculating the proper valuation for your investment property.
Read on to learn how much rent you can get. Explore topics such as rental valuation strategies and maximizing your return on investment.
Rental Market in Washington D.C
Renting in Washington D.C. is still a solid investment. The nation’s capital city ranks in the top 10 most expensive markets in the United States.
Rental units with just one bedroom over fetching over $2,200 in rent. An additional bedroom can get you $1,000 more each month.
Demand for rental units is strong despite the higher prices. The Covid-19 pandemic is starting to subside and people are now returning to work.
In fact, President Joe Biden expressed his desire for federal government employees to return to the office. This is a big factor behind sustained demand as employees are less likely to telework from a distant location.
Washington D.C. remains an appealing destination because of the culture and quality of schooling. There are many employment opportunities as well, resulting in strong demand to live in or near the capital city.
Techniques to Assess Value
The most common way to assess a rental property’s valuation is through comparison to other homes on the market. There are lots of price comparisons available on the internet and in real estate databases.
There are several variables to look for when performing a comparative analysis. The number of bedrooms and bathrooms is one of the primary inputs. Square footage in the home is also a major consideration.
The property’s sizes and amenities also warrant consideration. A rental property with an oversized deck and inground pool may command more rent. Other important factors include location, storage space, and additional rooms.
Another simple technique is to charge a percentage of your home’s value. First, this requires determining the resale value of your home.
This is an easy exercise if you recently purchased a home. Otherwise, you will need to perform some comparative analysis on the internet.
Real estate owners typically charge between 0.8% to 1.2% of their home’s valuation for rent. On a home valued at $200,000, this equals a $1600 monthly rent payment.
There are more complex valuation techniques used by real estate professionals. For example, one technique is called the capital asset pricing model (CAPM). This approach considers risk and opportunity in a return on investment (ROI) calculation.
Rental Valuation: How Much Rent Can You Get?
Now, you are ready to list your property on homes for rent. Methods like price comparison are common and easy to calculate.
Your location and the home’s characteristics are the primary drivers of rent. If you are still wondering how much rent can you get, contact us today to speak with a professional.