If you’re new to the landlord experience—or mulling it over for the first time—you may be wondering how you can minimize your risk. Ultimately, you want a market that is poised to take off, ready to give you the highest return on investment. How can you tell if a rental market is ready for lift-off, or about to sputter and flop? It’s easy: Stick to the numbers.
Thanks to its desirable location and growing job market, Richmond has seen rental rates climb more than 30% since 2012. Landlords report that as soon as one renter moves out, another is waiting at the door, and there’s no sign of it slowing down. Forward-thinking homeowners are choosing to capitalize on this momentum by hiring a property management team. The numbers support this move; check out this analysis of the Richmond rental market!
The Average Rent in Richmond
The average rent in the Richmond area is currently around $1,109. Size-wise, the average apartment being rented provides 867 square feet of space. The ratio of dollars to space is a low $1.28 per square foot. This is good news for landlords because it shows there is still room for growth! Slower markets like Vermont have ratios above $1.30, and red hot markets like Washington DC come in well above $2.00. With its steady growth, Richmond may soon climb into the upper echelon as well.
Rental Rates Have Gone up Since Last Year
One of the most outstanding statistics is the amount at which rents have gone up year-over-year. Since last year alone, rents in Richmond have spiked 4%! This isn’t only growth that is singling out apartments; it’s an average of differently sized rentals across the spectrum. The growth is as universal as it is strong.
Who’s Paying What?
The distribution of renters at different payment thresholds varies as well. One of the smallest ranges is between $501 and $700. Only 4% of renters are paying that little. The bulk of tenants are paying between $1,001 and $1,500 each month. The second highest group pays in the range of $701 to $1,000. These two groups comprise 87% of the rental market. The remaining 7% and 1% fall in the $1,501 to $2,000 and greater than $2,000 ranges respectively.
The high concentration of renters in the middle of the price range bodes well for the market. It shows the driving force is not the elite 1%, but the sustainable mass of folks earning wages that reflect the average.
How Many Rent and How Many Own?
Renters have a surprisingly large piece of the pie when it comes to the percentages of people who rent and people who own. In fact, they outnumber homeowners. About 54% of Richmond residents rent their homes, compared to only 45% that own.
Rental Price Movement over Three Years
Over the last three years, the average rental rates have skyrocketed from only $974 to where they stand now, $1,109. That’s an increase of $135 per month. The most robust growth has been seen over the past year, with rents climbing almost $100 per month since May 2018.
Rental Prices Vary by Area
Like all markets, the rental prices fluctuate from town to town. The Biotech and MCV District command the highest average rents at $1,514. The Capitol District and Richmond City Center boast similarly high rates. Toward the middle, we have Brandon, Chestnut Hills, and Wedgewood, coming in at $1,143. Providence Park, Ravenswood Farm, and Wilhaven procure rents averaging $770 a month. Your mileage will vary as a landlord depending on your investment's location in Richmond.
How Richmond Compares to Nearby Cities
The strength of a rental market is underscored—or brought into question—by trends in neighboring cities. Sometimes what appears to be an emerging market is just a bubble being inflated by temporary factors. On the other hand, a truly strong rental market is either a boat being raised by local tides—or is the tide itself. In the case of Richmond, the local data fully supports its rental powerhouse status.
Even though Virginia Beach had a year-over-year increase somewhat smaller at 3%, it still clocks in at an impressive $1,208 per month. Hampton, while commanding about $66 less per month, also experienced a 4% hike in prices. Williamsburg City further underscores the growth of the local rental market with a 7% change between 2018 and 2019.
Regardless of your target market—be it Gen X folks in their 40s or young millennials—Richmond has the prices and growth statistics to support a move into the rental market. An area like this is a safer bet than most, particularly for someone new to the landlord experience. The key is to provide a solid foundation for your renting venture, and with steadily climbing prices supported by surrounding areas, Richmond is an optimal launching pad!
Do you know the value of your investment property in Richmond? Mission Realty Property Management is pleased to offer our owner-partners a FREE rental analysis! This vital tool will help you see where your property (or properties) stand compared to the competition. Regardless of where you are in your landlord's journey, a rental analysis is the place to start!