Rental market intelligence.
If you rent a bit lower than market rent but can rent out sooner, it is beneficial to owner, right ?
Not so fast, let us look at the numbers.
If market rent is $1000, but at $900 you can rent out 15 days earlier, owner think this is good enough. Really?
Let us take a look at the numbers –
$1000/month, annual income is $12,000; next year with 5% rent increase, second year income equal $12,600; and so on.
$900/month, annual income plus 15 days equal $11,250; next year with 10% rent increase (maximum allowed in California), second year income will be $11,880 and so on.
This is only the difference in gross income. Try to calculate ROI, CAP rate, Internal Rate of Return (IRR) … the difference is exponential.
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