New York City boasts some of the most expensive rental pricing in the country. The neighborhood's rental valuation is so high because it's an enormous cultural and commerce hub.
The area is a prime example of "More money, more value." You can expect this rule to apply regardless of the rental location within the city.
Four factors affect how much you can justify charging tenants for rent. Read on to learn more about what determines NYC rental value in greater detail.
1. Rental Analysis
Rental analysis is a comprehensive assessment of your property's market rental value. These six elements, combined with proper accounting, will help estimate what your investment is worth:
- Rental Comps
- This compares your property to similar ones in the community
- Property Value
- It helps you set prices for the best return on investment
- Rental Income
- This is based on neighborhood rates to stay competitive
- Cap Rate (capitalization rate)
- It compares the property price to its generated income
- You don't include the mortgage in the cap rate calculation
- Cash on Cash Return (CoC)
- This compares the annual return to the total money invested
- Mortgage payments are part of the CoC calculation
- Occupancy Rate
- It helps estimate when you'll have tenants
- It's advisable to invest in neighborhoods with high occupancy
Your rental analysis should provide a value similar to other rentals in the neighborhood. That said, it may differ according to property amenities, location, and the market.
2. Demand for Rental Properties
Something else to consider when estimating property valuation is if you can find people looking to rent. A terrible housing market means rentals are in higher demand because they're cheaper.
Smaller, lower-cost properties usually go fast in these instances. Lower rental demand means charging above market prices is inadvisable.
3. Neighborhood Economy
A bustling economy attracts people looking for work and wanting to raise families.
For example, Hudson Yards can be expensive. But people flock there because of companies like CNN and L'Oreal. The neighborhood offers plenty of shopping and public attractions.
If possible, choose a rental location near jobs and entertainment. An excellent economy allows you to rent prices by quite a bit.
4. Property Amenities
Property amenities are as crucial for determining rental valuation as public ones. A nearby amusement park may not attract as many people as on-site washers and dryers.
Pools, hot tubs, dishwashers, and accessible parking are a few things that make paying higher rent worth the effort. Tenants want convenience and luxury.
Pay attention to amenities in your neighborhood. Consider adding on-site laundry or a pool to stay competitive.
Need Help With Your Rental Valuation?
Getting your rental valuation is crucial to making money on your investment. No one will want to pay more than what the property is worth. You won't make money if you charge less than the market price.
PMI Properties has been in the property management business for over 20 years. We want you to get the most out of your investment. We know rental pricing can be demanding, but we're here to help.
You can reach us through our website form or call 845-397-7766, Monday through Sunday, from 8 AM to 8 PM.