I am new to investing. I have been looking for deals through the MLS and making a preliminary analysis using rentometer.com to estimate the average rent of units in that area. I do not have a rentometer pro account and I am only able to pull 10 comps a day. This has really been limiting my data crunching abilities. How do more experienced investors estimate the rent they expect to receive on MLS listed properties?
@Bryan Blancke , there are several things you can do.
Other than rentometer, zillow has its own rent estimator. It's not always accurate but it gives you the ball park. You can also search on zillow for properties for rent in the area your are interested in and get a sense how much they are renting for.
You can use craigslist or some other for rent websites the same way.
If you want to take one step further, you can talk to property management companies in the area. They are usually on top of the market rents in areas they serve.
Hey @Bryan Blancke !
Welcome to the wild world of REI. So the easiest way to get an idea for rental rates is to see what an agent has imputed into the MLS system if the property is already a rental.
As you probably have already realized, some units are under rented. To get a better idea of what rents go for in your investing area area, I'd suggest using the search feature on craigslist.
Start out by researching 2 bedroom 1 bathroom apartments. Just like with anything there will be a range of prices, some really crappy and some really nice... Find your average rental rate by adding up all the results that come on the first page and divide by the total number of units on that same page. It'll give you a base line of where to go from there.
When we are looking at new property (which seems like always) we tend to estimate on the low side just to be safe. Then once we own the property if we can rent it for more - even better.
I hope this is helpful! Let me know if there are any other questions I can help you out with. And as always, I'd love to connect on here. : )
Check Craigslist to see what other private owners are renting for. You can also look on Apartments.ciom, Apartment Guide.com and the bigger sites to see what larger complexes are renting for as well to compare.
@Bryan Blancke when I was buying SFHs I would simply ask the real estate agent to pull rent comps then verify with my property mgmt company what I think I can get. I don't share with the property mgmt company my initial findings so that their opinion isn't influenced by my initial findings.
Thanks for the replies everyone.
"So the easiest way to get an idea for rental rates is to see what an agent has imputed into the MLS system if the property is already a rental."
I have noticed that some MLS listings will say what they are currently collecting on rent or what to expect for rent. Are these trustworthy estimates? One property in particular which I analyzed said the rent was way over the market rent for that area. I couldn't believe that the rent the MLS post listed was the rent actually being collected. It was way above the rentometer average rent for the area.
On the same note, do other investors trust the estimates on rentometer? Im considering paying the monthly membership to help expedite analyzing a large number of MLS listings.
Actually I think a large number may dilute findings if your rents vary some by neighborhood. An average is an average, you want the most accurate for the particular property. An outlier that shows higher then usual rent don't include in your analysis. The fact that you recognize a property like that means you are getting a feel for your area.
Rentometer in our area isn't great because furnished/unfurnished, heat/ no heat included are all tossed together and we have a mix due to the student population. It is a ballpark. The best is to find properties similar to yours either on MLS craigslist or other sources and find their rent. Also PM companies often have listings of available houses on their personal web sites. Always round down on the rent estimate.
Check what the competition is doing.
Call FOR RENT signs and review ads of similar properties on Zillow, Trulia and craigslist.