How to determine rents in an area?

Question

I've been looking at tools like rentometer.com and trying to figure out rents in residential area's like single family and it seems like its way off in most cases. is there something I'm missing? what do you use, or how do you determine rent?

Michael Helfant · Answer

HI @Koray Kilic - There's a few ways to pin down most accurately what you might expect. As a preface here, notes below are from my experience in the Metro Detroit market...

First, when we help a client project rent, we send the data available to us on the MLS. Those leases generally lag behind a bit and are listed by agents and property managers exclusively. OFTEN, then, those numbers are slightly lower than what our clients end up getting post-close. Many agents/PMs simply aren't as motivated as the actual homeowner for a particular property, OR just simply not as experienced listing in that area and may not get max rents. A huge swing factor is also quality of photos for those as well. At the end of the day, we'll project for clients what we see in that data set.

That being said, the rental market here is pretty scorching hot right now, and a lot of folks are getting max rent and getting it quickly. When I look right now for myself personally and for clients who are a little more aggressive, we'll start factoring Zillow, Realtor.com, etc. While I don't look at the Zestimate in those places because it is definitely hit or miss, I DO look at what is currently listed in and around that area. More often than within MLS data, it is property owners listing for as much as they can realistically command there.

Like @Michael J. said, a PM and/or investor friendly agent in the market you're looking in should be able to give you a pretty good idea, too, and then you can dial it in from there yourself on your end as well to make a decision or projection.

Mike Smith · Answer

Another overlooked method is to call a property manager in the area.  Tell them you are considering purchasing a property and are considering using them for property management.  Ask them what their opinions of realistic rents and have them send you info on any similar properties in the area.  It only takes 5-10 minutes of their time and you have made a contact in the industry.

Michael J. · Answer

You could look at local property management companies websites and just get an idea of what they are listing rental properties for.  There is also  www.padmapper.com  & www.rentbits.com that you could try.

Chase Parrish · Answer

I find Apartments.com very helpful. I use this website to gain real time comps in my market. Just be careful when selecting subject properties, and ensure that they are truly comparable to your property.

Joshua Janus · Answer

I use a combination of rentometer and zillow which seems to be an accurate gauge of the area.

James Galla · Answer

@Koray Kilic

In addition to rentometer and consulting a realtor, I like to have a look at the similar available units presently listed on Zillow/Apartments.com. So, when you list your property, you'll have an idea about what units you are competing with along with the condition and price of those units.

I also like the Zillow Rent Manager portion because it will show you what similar properties rented for (although, I think looking at the present listings and seeing how long they have been listed may be more valuable.)

When you follow a marker enough, you'll start getting an idea of about how much your units can go for.

Good luck with your pricing,

Jim

Marc Rice · Answer

You can pull comps with Rentometer.com or by checking for actively listed properties on zillow or apartments.com and see what comparable listings look like.

Jabari Long · Answer

I’ve found RentOMeter to be very accurate.  However, the best source are local Realtors that will send you Rental Comps.

Davartay Miller · Answer

When you say way off – what exactly do you mean? I do typically tell people that it's a nice free platform to use to get an idea of some sort. When you input your info/data – after you generate the report you must narrow your search down by finding those similar in size to the subject property. You can not just press enter and ready the summary reported numbers on the first screen. However, It's a good starting point. However, to your point – sometimes the platforms are off. This includes Zillow, Realtor, Roofstock, MLS, etc. A house is only worth what someone would pay for it.

Best Regards,

How to determine rents in an area?

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