What is the effect of high variability in monthly rents on potential investments?

High variability in monthly rents indicates that rent prices can fluctuate significantly from one month to the next. This fluctuation creates uncertainty about the expected returns on an investment property. Investors rely on consistent income streams to make financial decisions and plan for the future, and high variability complicates this process. When rents are volatile, it becomes challenging to project how much income can be realistically expected over a given timeframe. This uncertainty can deter potential investors, as they may perceive higher risk associated with the investment. Consequently, the correct choice reflects that high variability leads to lower certainty in expected returns, which is a crucial factor when evaluating potential investments in real estate markets.