Rental Property Comps
My first and only rental property in East English Village has been underperforming since I acquired the property in 2019. I believe it can do well if renovated to attract higher quality tenants and rent at the market rate instead of below market as it is now. The challenge I'm having is determining the renovation budget against the expected increase in rent. I've asked for feedback from my property manager (response wasn't very helpful) and have looked at comparable rentals on Zillow/Trulia/etc. and rentometer but I would like more confidence in the numbers before hiring a contractor. Does anyone have suggestions on other ways to determine if the planned renovations will increase the rent to the needed level? Are there other resources I may not be aware of or consultants for this? Thanks.
Quote from @Rassan Sampson:
My first and only rental property in East English Village has been underperforming since I acquired the property in 2019. I believe it can do well if renovated to attract higher quality tenants and rent at the market rate instead of below market as it is now. The challenge I'm having is determining the renovation budget against the expected increase in rent. I've asked for feedback from my property manager (response wasn't very helpful) and have looked at comparable rentals on Zillow/Trulia/etc. and rentometer but I would like more confidence in the numbers before hiring a contractor. Does anyone have suggestions on other ways to determine if the planned renovations will increase the rent to the needed level? Are there other resources I may not be aware of or consultants for this? Thanks.
There's no easy answer. It may take some time studying the market by looking for comparables on zillow, apartments.com, realtor.com, or whatever and just really getting to know the market.
You could try shopping around other property managers. Describe your house to them as if it were fully renovated and see what they think it would rent for. Keep in mind their estimates are just educated guesses and shouldn't be relied on since they haven't seen the house and it's not fully renovated, but it can get you pretty close in the ballpark.
I'm a realtor in Detroit (I live in Morningside, right next to East English Village). We can do PM and simple lease ups depending on what you need. Would be happy to run a CMA and chat about what you're looking to accomplish.
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@Rassan Sampson Besides Zillow/Trulia/etc. and rentomete, you can ask your PMC for MLS data.
Just make sure you fully understand how your property compares to the comparables. Note what your property is lacking.
Once you understand the additional rent amount you may achieve, then you should translate that number into a budget.
EXAMPLE: if you project an additional rent amount of $250/month, how many months do you want to spend on improvements? 12, 24, 36, more? So, each 12 months => $3,000
Then rank the improvements from your list of what is lacking, via "bang for the buck" - meaning what improvements will most likely positively affect the rent amount.
Depending on your budget, you may pick items out of order.
A lot of this is not an exact science, but your PMC should be able to offer a decent amount of assistance.
Thanks for the feedback everyone, I was recently able to get some help with MLS data which is a lot more helpful than what I could find myself on Zillow/Trulia, etc. I'm using this to adjust/trim my initial SoW and I think this will be a key part in not over renovating for the area. Thanks again and I'll try to follow up in a few months on how this turns out.
Hi Rassan! I'd be happy to help with a rental estimate. Feel free to reach out!
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