What are the best ways to do rent comps for SFH?

15 Replies

Single family houses are very different than apartments in many ways. One of the most distinct ways I've found them to be different is that there are rarely two identical houses. This means coming up with the correct rental prices can be very challenging at times because there are no direct comps and you need to come up with a different price for each property rather than one set price for an apartment community. 

This can make coming up with accurate rental prices very important for property managers because if you list a property too high it will sit vacant collecting no money, and if you list it too low you will end up with a lease generating much less cash flow than you could have potentially received.

Here are a few ways I comp out my rental properties, but I am really looking for some advice on how everyone else comps out their properties and how I can improve upon my current methods. 

Previous rental results with the same house - The first thing I base rent prices off of is previous results with that house and others in the area or of similar style and size. If I had trouble renting the house last time I know I was probably at the top of the market, if I rented it in 2 days I was probably a little low.

Previous rental results with my other houses -I've noticed with SFH's location can mean a lot of different things to different renters, sometimes they just want to be on the south side of town on a nice block and sometimes they want to stay in the same 3 block radius so using nearby results is great, but even houses across town can help me understand what the appetite is for people in my city. Often times people are willing to move 20 minutes away from their originally desired suburb to a different one as long as they can find the type of house they want in their budget. Because of this I usually look at what my other properties of similar type are renting for around the city to try and see what type of price I can get is for my current vacancy.

Craigslist - I use Craigslist as my main source of marketing, thus my houses will be competing with everything else on Craigslist. I want to be in line with my competition and if Im too high on my prices everyone will call the other guys ad that is listed right next to mine. If my price is too high (or too low) compared to what I see on craigslist I know I need to make an adjustment. I usually look in the nearby vicinity (the map tool is great for this) for what is in that neighborhood. It can be hard to find comparable properties sometimes, but venturing too far out means you are no longer competing against those ads in the same way. If their are no comparable properties it can be both a good and bad thing. I know anyone looking on craigslist for a house like mine doesn't have very many options which means I either can set the market myself with little competition or there isn't a high demand for my type of property.

HotPads- This website is similar to Craigslist and my second form of advertising. Hotpads takes info from Rentlinx and Postlets to show houses available much like craigslist does. I use it in basically the same way I use Craigslist but can usually find more comparable properties and they are usually better made ads meaning I know if the property on there is similar to mine or in much worse or better condition.

Rent-O-Meter- This website is designed for residents who are looking to see if their rent price on their property is reasonable. It has a lot of false information as people can type in whatever they want and it will create a new result on the site, but its one of the fastest ways to check to see if im in the ballpark with my prices. There is also no way to see if you are comparing against similar properties, a 2 bedroom 600 sqft apartment will look just the same on rent-o-meter as a 2 bedroom 1200 sqft house, but because this site has the most results so you can usually still get some helpful input from it.

Calling Nearby For Rent Signs-I don't really like this method and only did it when I started and didn't know much about rental prices. You can get the most info this way and really nail down the specifics of your competition but I don't like bothering people or being dishonest about my intentions telling them I am looking for a rental when I really just want to know the price, amenities and condition. You also can't actually see inside the property unless you take this tactic way too far and waste a lot of yours and other people's time. Its by far the most time consuming out of all the methods I've used and sometimes there are very few or no rentals in the area.

Again I'm looking for some feedback on ways to price out your rental homes.

MLS as well

Originally posted by @Bryan N. :

MLS as well

You are correct. This works much better in some markets rather than others though, in Kansas city where I am there are only a handful of rentals on the entire MLS.

I use a combination of the below:

www.rentometer.com

www.zilpy.com

www.zillow.com

www.padmapper.com

www.hotpads.com

None of these are going to be perfect, but the top 3 are decent automated services that can get you within a range. Pad mapper and hot pads show live listings that can be compared to the unit you're comping. They're not identical, but comps never are, they are 'comparable'. If there are no comps on market, I use the historical listings from rentometer and see if I can find a cached version of the listing on hotpads or some other site and check them out that way.

The problem with sites like Zillow and Craigslist is that they don't show what actual rents are. They show what people are trying to get which is like using an active listing for a sales comp. Most rentals in any market aren't done on the MLS so that doesn't help a lot either. I ask my property manager for their input. They're the ones that will know best.

I like Craigslist, but definitely mls as well.

Originally posted by @Mike D'Arrigo :

The problem with sites like Zillow and Craigslist is that they don't show what actual rents are. They show what people are trying to get which is like using an active listing for a sales comp. Most rentals in any market aren't done on the MLS so that doesn't help a lot either. I ask my property manager for their input. They're the ones that will know best.

 Agreed! And great point, this is why actual results you have had are better than just looking at what your competing against. Nothing quite trumps experience. If you are your own property manager networking with other property managers to gauge rent prices would be a great way to use actual results and lean on their experience rather than just your own could be very helpful.

We have a little bit of an advantage when it comes to using actual rents. We focus in a small number of areas so over time, have a good base to use as our basis. I can look at an area and know almost instantly what the rent will be because of our history in that area.

Great info and links above. Something to consider along side the monthly rent numbers is average tenant duration and vacany duration for the area. Factoring these numbers will give true meaning to the monthly rents and your actual NOI expectations. Without knowing the average duration numbers it is sort of on paper guessing game as to the actual future returns expected. Thanks, Matt

Originally posted by @Phillip Syrios :

Rent-O-Meter- This website is designed for residents who are looking to see if their rent price on their property is reasonable. It has a lot of false information as people can type in whatever they want and it will create a new result on the site, but its one of the fastest ways to check to see if im in the ballpark with my prices. There is also no way to see if you are comparing against similar properties, a 2 bedroom 600 sqft apartment will look just the same on rent-o-meter as a 2 bedroom 1200 sqft house, but because this site has the most results so you can usually still get some helpful input from it.

 This isn't 2005 anymore so I don't know why anybody would still use Rent-O-Meter given all the problems you yourself acknowledge that it has- it doesn't differentiate between a apartment vs a single family home, doesn't factor square footage, doesn't  factor in bathrooms when there's a big difference between a 3 bedroom with 3 bathrooms vs 3 bedroom with only 1 bathroom, etc...

Zillow  isn't guaranteed to give you a perfect comp, but I feel that their algorithm takes all that various factors into account which Rent-O-Meter doesn't. 

@Josh L. I agree, I guess the most helpful thing about it is that its so quick. It doesn't take a lot of effort to see what results you will get even if the information is not of high quality. I never thought about using Zillow. Are the numbers you get from Zillow any good?

I use craigslist. I keep an excel spreadsheet and once a day I check for new rentals similar to mine. I track square footage, price, reductions and increases.  I place a value on the properties based on how many photos were in the ad, how it looked inside and out (flooring, backyard, etc). When I find one, I note the date the ad was published and save a link to the ad in my favorites. Once a day I check to see if my saved ads are still on craigslist. If they are not, I note how many days they were live. I assume that the place was rented when the ad is removed. If the ad expires, I do not take that ad's rental time that seriously. I have found that in my area of units, a well priced unit rents in a couple of weeks. Not much moves here in November and December. I hope that helps Phillip.

Originally posted by @Minnie Milkbones :

I use craigslist. I keep an excel spreadsheet and once a day I check for new rentals similar to mine. I track square footage, price, reductions and increases.  I place a value on the properties based on how many photos were in the ad, how it looked inside and out (flooring, backyard, etc). When I find one, I note the date the ad was published and save a link to the ad in my favorites. Once a day I check to see if my saved ads are still on craigslist. If they are not, I note how many days they were live. I assume that the place was rented when the ad is removed. If the ad expires, I do not take that ad's rental time that seriously. I have found that in my area of units, a well priced unit rents in a couple of weeks. Not much moves here in November and December. I hope that helps Phillip.

 How many units do you manage? I feel like this would be very difficult once you get too many different types of properties...

I take the average for the area, using several of the above, and add 100. My units are usually nicer when i'm done upgrading and people want to rent from me after meeting. If I don't get a good one then I go down in 25 dollar increments. 

Originally posted by @Phillip Syrios :

@Josh L. I agree, I guess the most helpful thing about it is that its so quick. It doesn't take a lot of effort to see what results you will get even if the information is not of high quality. I never thought about using Zillow. Are the numbers you get from Zillow any good?

I wouldn't set my rents by what Zillow said, but I find their numbers to be much closer and more in the ballpark compared to Rent-O-Meter's numbers. And, Zillow is just as quick and easy to use as Rent-O-Meter.

You should try and test it out to see what I'm talking about. Take a SFH, where you have a good idea what the market rate is, and compare that versus the numbers you get from Rent-O-Meter and Zillow.

Originally posted by @Phillip Syrios :

 How many units do you manage? I feel like this would be very difficult once you get too many different types of properties...

 I manage 5 units. Even for 5 the craigslist spreadsheet is a lot of work, but it works best for me. You might try just watching a few representative ads instead.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.