How to analyze a rental market?

Question

Hi everyone! Been lurking here for a couple weeks and am starting to post today. Great site with tons of resources.

I'm a recent college grad planning to buy a home in the suburbs outside Philadelphia within 1-2 years. It's about a 30-40 minute drive from the city, and public transportation is also available. My wife and I are also interested in real estate investing, specifically buy/hold/rent strategy. We wanted to buy a duplex to live in one unit and rent the other (as often recommended for new investors), but we're not sure whether the area we're intersted in has a strong demand for rentals or not.

Does anyone have any recommendations on how to analyze whether an area is good for rentals?

Thanks for reading!

Jassem A. · Answer

I usually look at Hotpads, Zillow, Craigslist, etc to see how much properties are listed for on average in the areas I'm looking and then I will expect that I can rent a property for that much or 100-200 less.  Demand is important I suppose but once you find a long term tenant, demand is less of a factor.

Lucas Pfaff · Answer

Hey @Dan Vu !

Funny running into you on BP and awesome to see you and the wife are looking to get into REI (Congrats BTW).

I like both of the ideas you presented above. Personally, I would lean more toward the latter, live outside Philly and rent inside, but it's tough to weigh the other option without knowing the other area you are considering. There are many factors to consider.

Feel free to drop me a PM sometime if you want to connect and discuss further.

Lee Smith · Answer

What Jassem says is what we use to figure out rental amounts.. I am a Realtor(don't hold it against me), so I also check our local MLS to see what actual rental rates are going for...

Account Closed · Answer

Congrats on your first post. Great luck!

Account Closed · Answer

Lucas, long time no see! Didn't know you were on BP. Definitely will PM you one of these days with my plan. Thanks!

Account Closed · Answer

Thanks Greg!

Account Closed · Answer

Thanks for the tips Jassem and Lee!

I did a quick check on hotpads and there seems to only be 1-5 duplexes up for rent in the area I'm interested in as well as 1-5 available in the surrounding areas.  Is this a sign that it's a weak area to rent?

Another option we were thinking about was to purchase a SFH in this area to live in, and then purchase a seperate MFH inside the city for rent. Philly has multiple colleges in the area, so we believe there's tons of opportunities to rent to students. We also rented in Philly during our college years so we are very familiar with the area. Would this be a good alternative to our first plan?

Lucas Pfaff · Answer

Sounds like a plan @Dan Vu

Also, you may want to tag people so they are notified when someone mentions their name. Otherwise, responses may go unnoticed. In order to tag just start typing their name after @ and their name should pop up to be selected at the bottom of the text box.

How to analyze a rental market?

Most Popular Reply