Estimated Rental Value – Not to be confused with the After Repair Value (ARV), the Estimated Rental Value is one of the most important factors (if not, the most important factor) an investor should consider when deciding to purchase a piece of investment Real Estate.
It is also known as market rental value. It is the open market rent value that a property can be reasonably expected to attain based on characteristics such as: condition of the property, amenities, location and local market conditions.
In a market where demand exceeds supply, vacancy rate decreases and rents rise. In this case, the estimated rental value may exceed the passing rent. This can be influenced by factors such as when the current lease contracts are signed and what market conditions and rent levels were prevailing at that time.
ERV mostly applies to a property’s vacant space that is expected to be absorbed over the period that the estimated rental value refers to. The ERV may also apply to leases that are coming up for rent review.
On the other hand when supply exceeds demand, vacancy rate increases and rents decline causing the ERV to be lower than the passing rent. When analyzing the profitability of a rental property, an investor most consider the ERV as well as the cash flow or the money that is left over after all expenses are paid out.
Find Out The Estimated Rental Value* Of Your Property:
*Estimate will be provided within 3 business days by email or phone. Information provided regarding Estimated Rental Value or any other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be a substitute for a visit, consultation, or advice of a legal, tax, Real Estate, accounting, or any other professional.
