How to Determine Rental Prices?

20 Replies

How can I determine the actual price that my current home will rent for? Is there a website that will tell me how much homes in my neighborhood are currently renting for?

Rentometer gives you a "range". I think they pull from Zillow and a few other affiliate sites.

I pull up rental comps on MLS. I look for the most identical properties I can find that have recently rented in the immediate neighborhood. First I'll look in the subdivision. If there aren't enough comps I'll widen the search a little, maybe a half mile around the subject property. Once you pull up the comps you'll have a good idea of the optimal rental price.

I find the sites like rentometer, zillow, etc. to be inaccurate, usually off by at least a couple of hundred dollars.

There is not one source by itself that will tell you what the rent should be. You need to check multiple sources (i.e. Craigslist, Zillow, Rentometer, Trulia, Hotpads, local property mgmt companies, etc). 

Rentometer, for instance, does not even factor in how many bathrooms a home has, the condition of the home, size of the home, or even type of home (apt vs SFR). It's mainly just comparing properties with a similar number of bedrooms in the general vicinity. Not really an accurate way of determining "comps".

Another place to check for some more ideas on the topic is BP's own Ultimate Guide to Fair Market Rents.

I also start with rentometer.  Then over the course of a couple of weeks I look at all the rental properties on Zillow.  (Actual listings, not the zestimate)  I sort them low to high. It's usually clear where my house will fit into the mix.  For example my house may be nicer than all of the houses listed for 1100, 1200 or $1300.  Some of the houses between $1300 and $1500 are a little nicer or a little worse.  Houses over 1500 are much nicer!  So now I know 1300 to 1500 is my sweet spot.  I continue to review every house that comes on the market between 1300 and 1500 to see what my competitive price point.

I drive by houses that seem like a good match and attend the open houses if they have them.  After doing all of that it's usually  straightforward  to price.

Originally posted by @Ryan Dossey :

Rentometer gives you a "range". I think they pull from Zillow and a few other affiliate sites.

IIRC, rentometer requires the user to enter their unit's (asking) rent before giving the range of rents for similar units and the indication of reasonable or too high. So once they get that user's input, rentometer then has another data point to use when evaluating the next request for similar units in that area. 

In addition to the sites previously listed, Rent Range provides a pretty decent market report and prediction of what the property will rent for.  It does cost to run a report, so I used it as my last check on a property before I sign on the dotted line.  Is it necessary? I don't know, but I like the extra confirmation

This is a dilemma that I'm facing now, as well... the tenants just moved out of my one rental property... when I was choosing rent last time (fall 2012, in San Jose, CA area), there were 12 comparable properties within a few miles that I could use for reference.  I pinned the rent at $2700/month, and never raised it while they were there because they were amazingly wonderful tenants.

Now, though, I'm trying to look around for comparable properties, and there are only 2 or 3 within several miles; with prices scattered as from a shotgun!!  Housing availability has been terrible for many months in this area.  

On the one hand, I *could* treat that as a "charge what I want" opportunity, but I'd rather charge a little low and hope that the tenants appreciate the bargain...

If you have a Realtor friend ask them to pull comps. I recently tried and the numbers were way off actual market. Granted, our market has skyrocketed in the last year, but to be off by 25-30% leaves me wondering if I want to ever visit their site again. As far as CL, that can be an indication of asking prices but you need to get a lot of information on your particular style of property to account for someone asking crazy stupid money. You can pull from all three data sources and try and get an average. One last idea: call 3-5 local PM in the area and ask them about renting a property similar to yours. Good luck.

@Account Closed

 I am in San Jose and know how tight the rental market is here. One think you can do is set up a search on Zillow/postlets where your rental property is and when similar properties come on market it will send you an email. This way you can constantly monitor rental market in the area. 

@Jennifer Streamer

I like your method. I do something very similar. I use a Bay Area rental service and craigslist and I rank all the units by price to see where my unit fits in. I think this gives the most accurate picture. You end up getting a Bell curve and you can see if you are competitive or over priced. Also, for the pricer units you can see what features bring the higher rent.

In my area (SF Bay Area) the MLS isn't as commonly used for rentals, so the prices there seem very inflated and geared towards people using company-provided relocation services. I find the craigslist map search gives me the best block-by-block comparison in a place where being only .5 mi away, but on the "wrong" side of a certain street can make all the difference in the world.

You also post a "coming soon" ad for the price you think is fair and see how many calls you get and from what type of tenants.  This might not only give you the data you seek, but also set you up with some good prospective tenants.  I once waited until the last minute to advertise a property, and I found that the people who were in need of a house on five days notice tended to be the ones that had been rejected by every landlord in town already.

Good luck!

I've found Rentometer to be very accurate in my market. On the one occasion I did not heed the "your rent may be too high" analysis, my property sat for almost 2 months while I incrementally dropped the rent. Once I was in the Rentometer "reasonable" zone, it was snapped up. 

When I list a property for rent, if the phone doesn't ring at least 3 times a day (in my market), I know it's overpriced. I deviated from my experience with our last rental property; I won't do it again. I do check Craigslist and a few other sites as well.