How much dollars per square foot do your units rent for?

Question

How much $$ / sq.ft. / month do your units rent for?

Trying to get an idea. If you could include your city/state and the type of area, as well as your best estimate on class A/B/C/D area. Cheers for your input.

Can I do a poll on BP?

A. <$0.50/sq.ft./month

B. $0.50-$0.99/sq.ft./month

C. $1.00-$1.99/sq.ft./month

D. $2.00-$3.99/sq.ft./month

E. $4.00-$6.99/sq.ft/month

Kimberly T. · Answer

Yes, a 3 bedroom will absolutely rent for more than a 1 bedroom of the same size.  Rents are much more a function of bedroom quantity than square footage.  Also, amenities and condition of updating affect rent more than square footage, in my experience (as you stated, a luxury 1 bedroom might rent for more than a 3 bedroom of the same size, but then you're not comparing apples to apples - if you compare a 1 bed and a 3 bed in the same neighborhood with the same amenities and interior condition and square footage, the 3 bed will command a higher rent).  In fact, I don't even look at rent/sq ft in pricing my rentals, it's that irrelevant.  But since you asked, I'll figure it out now and post what each of our units rents for per sq ft:

1) 2 bed 1 bath unit, about 850 sq ft, in a 50-ish year old building in Orange County CA, probably a C+ area. We just rented one unit that still has the original kitchen last summer for $1325, so that's about $1.56/sq ft.

2) 2 bed 1 bath unit, about 750 sq ft, in a 40-ish year old building in Scottsdale AZ, I think about a B- area.  We rented one with the original kitchen/bathroom for $615 and another with an updated kitchen/bathroom for $635.  That's around $0.85/sq ft.

3) 2 bed 1.5 bath unit, about 1100 sq ft, in a 30-ish year old building in Colorado Springs CO, probably B+ area.  We just bought it last month so we are still working on getting it spruced up, but once we do, we'll be asking at least $845 for rent (currently rented at $800).  That's about $0.77/sq ft.

Obviously, location has a lot to do with rent too, but that's true even in your local market.  For example, our CO property is in one of the desirable areas of town (good schools, etc.).  The same unit in certain other areas of town would rent for probably $600.

If you're trying to figure out how much you can get for a particular rental, just pretend you're looking for a unit like that for rent and search online.  Go to craigslist, hotpads, etc., put in your number of bedrooms, and see what comes up in the neighborhood to see what reasonable rents are.  Renters don't search for units based on square footage, they search based on number of bedrooms and neighborhood (and a max amount of money they're willing to pay).

Daniel Elbe · Answer

the 1 or 2 % rules are just generic guidelines to do really quick beer math on whether a property will be profitable as a rental. You always want to look at the more detailed numbers,  and the overall demographics of the area. Those rules mean that after factored expenses they will most likely be profitable.  Again, depends on the area and demographics too.

Sylvia B. · Answer

I have SFRs in a small rural town. I would consider them to be a B+ class. All of them rent for <$1/ft² and most are <50¢/ft².

But you must also factor in lower costs. Property taxes on my most expensive house are <2¢/ft²/month, insurance ranges from 2-4¢.

Andrey Y. · Answer

Beer math eh?

Thats my point though. Someone with a 0.6% rule house may cash flow better than a 2.0% house. Given that, wouldnt that make the % rules effectively useless, even for doing quick beer math.

Bogdan Cirlig · Answer

I can give you precise numbers for any area in the US. We compute that info monthly on all Geography levels from Nationwide down to Zipcode across about 1 million rentals monthly. Again, those are "medians", as @Ron N pointed out, various amenities will change that $/sqft however :).

Sylvia B. · Answer

Exactly. That's why I also broke down my tax & insurance expenses in the same way. Income is never just about the amount of rent you can charge for a unit.

Roy N. · Answer

@Andrey Y.

In commercial properties we let by the ft^2 or m^2.  In the residential world it has little significance.

As an example, we have 2-bedroom units of ~1100 ft^2, both in the downtown core and within 3-blocks of one another.  One rents for $850/mth ($0.77/ft^2) and the other for $1025/mth ($0.93/ft^2).   While the same size, the finishes and target clientele differ.

Andrey Y. · Answer

Agreed. My place in Mililani is roughly $2.50/sqft. But in waikiki I see well over $4/sqft.

To respond to some of the folks that commented earlier, why do we constantly talk about the 1% and 2% rules then? Its no more useful than $/sqft as @Joe V pointed out, the cost of money/expenses etc. matters.

Frank Jiang · Answer

http://www.zillow.com/research/data/

Under Zillow Rent Index.

I bet the data would look very interesting if you had a lot of data points and a nice data visualization tool like Tableau.  It also sounds like a lot of work for something that rentometer tells me in 30 seconds.

Joe Villeneuve · Answer

Now I gave one answer to the question above...but I have a follow up question to it.  What difference does it make..to compare that is?

Every market is different.  That's an obvious statement, but to what affect?

Here is why the answer really doesn't matter.  If I have a property that I rent out at 95c/sf, I bet there is someone out there that under the same conditions in their market, with the same property description, with the same neighborhood, but in a different state (even in the same state, but a different city)..that is renting for as much as $2/sf...and I'm cash flowing better.  That wasn't written to say my market is better...it's just a statement that says "one person's dollar isn't equal to another person's dollar", when you're talking about REI.

..and I bet there are a number of investors out there that could be saying the same thing.

How much dollars per square foot do your units rent for?

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