How To Determine Duplex Rent

Question

I was looking at a duplex on Zillow and saw the Rent Zestimate at $2000, now could you charge this per unit?  Would also love to know any other methods if determining rent in duplexes.  Thanks.

Brian Wilson · Answer

My recommendation is that you avoid Zestimate tools. Instead you can look at current listings of similar kind on zillow and assume that the lowest range is the floor for what you can get. That's how I analyze properties, some might consider it overly conservative or "sand bagging" in the underwriting process, but it ensures that I'm not evaluating the deal with the most likely numbers. That being said, when looking at listed properties see how long they were listed for. If it's been 120 days or more I would say rent is either too high, or the property has something wrong with it.

I had a subscription to rento-meter for several years. I do not feel that in my markets it was accurate enough. Either way too low (most common) or too high even when comping out the rent data against the new property.

Lucia Rushton · Answer

if you are working with a Realtor, they can do comps on duplexes vs SFH in the same neighborhood.

Trevor Richardson · Answer

Zillow data can be accurate but you have to research and know how their algorithms work. The more unique inventory in a market with little comps will yield more inaccurate data. If you have common type inventory where there is similar units Zillow will work well.

One thing with multifamily, Zillow (or any regular RE site) does not understand units. There is no datapoint for unit count. So you would have to click on the unit(if there is one) for the property to get a Zestimate for that unit. I believe Zillow has the most data but it’s not perfect. We use various sources and most of those sources seem to use Zillow rent comps so even if you use an alternative source it’s most likely a Zillow comp anyways. Use and few and average them out.

Zachary Ware · Answer

There are some great points already commented but I have been using the BP Rent Estimate and found it to be fairly accurate compared to current rent listing on sites such as Zillow. Does anyone care to share their thoughts on the BP rent estimator accuracy?

Jonathan R McLaughlin · Answer

we use rentometer and its helpful but @Brian Wilson's caution is a good one. Kinda triangulate the sources you use and you will have a good idea. Zillow, facebook, craigslist--I love calculating the difference between what people are trying to rent for in Apts wanted vs. the vacant apartments :). Look at what people in the town earn...rent should be no more than a third of the income for a balanced household.

Market price is not a point anyway its a spectrum, so figure out what you have and if you want to be the cheapest option in an expensive place, the nicest place at the price, yada yada.

We are in a low vacancy era still, so lots of price appreciation making the standard tools a little laggy

Luke Ilijevski · Answer

Hi Caleb, adding on to what the rest of the group has said - be cautious trusting Zillow rental data. That being said, it can offer a useful data point and offer a very rough idea of interest when reviewing the "days listed" vs. "# of contacts". The number of contacts is only visible for those who choose to apply directly through Zillow (excluding those who apply directly to the owner/mgmt company), but depending on your area it may offer additional data points that other services may not.

Facebook groups can be useful for seeing real-time interest in properties (i.e. if your property would be near XYZ college, there is likely a Facebook group for "XYZ Off-Campus Housing" or similar group name that would yield a collection of prospective tenants that are likely expressing interest on other posts within the group.

Max Guerrero · Answer

Hey Caleb. I wouldn't trust the numbers they give you. Instead take a look at Craigslist, if it's popular in your market, or like Brian mentioned, Rentometer. There is a paid version of Rentometer that shows you the comps in the area with pictures, sqft, and other info so you can gauge where you would be at compared to them.

How To Determine Duplex Rent

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