Ways of gauging potential rent?

5 Replies

Would appreciate advice on gauging potential rent for a property? Are ghost ads ethical? Single family home. I've seen comparable rentals but not close to my property. Appreciate your input

How big is your estimated range? what are the consequences if you price it higher than market? what are the consequences if you price it on the low side? The market isn't an exact thing, it is all about what each individual potential renter is willing to pay. if there aren't any comps near your property, everyone else will be guessing, too, including renters. Maybe consider the probabilities at each price point and go with the one that is most likely to meet your needs.

If you don't have rental comps in the area, maybe get creative with those properties that are similar, and then assess how much the differences are worth (e.g. garage vs none, fenced yard, etc.).

If you would really like to get an accurate assessment of what your rental's market price is, start a little above what you think it should be and see what kind of response you get from the online ads.  At that point, the responses are going to be primarily based on your offered price vs. disclosed amenities, so you can get a good idea by the volume alone.

If the response is limited, drop the price by $25 after a week (preferably having the weekend in the middle of this several day "test"), change the default image and alter the ad title slightly (or, alternatively, post a new ad) and give it another week. You'll soon find your market rent.

Good luck!

This is such a sensitive topic for me...I find that many investors actually price (brace yourself) - too low for their market. When the property doesn't rent, they start lowering the price more. Bottom line is that if a property is priced too low, many prospective renters think something must be wrong - and they move on. If you don't have comps in your rental market, calculate what a mortgage payment (with taxes and insurance added to it) would be on comparable sold properties - and use that as a guideline.

I agree with @Patricia Steiner . I've always priced my SFR rentals higher than any other listed rental in my market and my phone doesn't stop ringing. Granted, my properties are generally 'nicer' (stainless steel appliances, granite countertops, wood floors, new paint, etc.). I definitely get the passerby's that 'complain' it's too expensive, but I always end up with 2 or 3 applications from hard working, credit worthy, tenants.

The human brain is an interesting organ; We associate price with relative value.