estimating rent for a rental investment

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estimating rent for a rental investment

Justin Scott

Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes

Hello BP members,

What you are guys using to project potential rent of a property when analyzing a deal?

So far i have rentometer and checking with local property managers.

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Jen R.

Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes

Are you looking at apartments or SFR's? I find single family rent prices to be harder to nail down because there are fewer comps and they are harder to track. When I first started I kept a spreadsheet and tracked rental info for my area for several months, so that I could get a feel for market rates and how quickly places rented. Track whatever sources are popular in your area for listing properties (Zillow, Craigslist, FB marketplace, etc.). Within a couple of months I had a pretty good understanding of the market.

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Bjorik Mutize
Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
7y
Same as you local property managers, online resources like rentometer and rent-cafe
I gather 3 or more true comps from places like apartments.com to gauge against competitors (quality, size, amenities of their units vs yours)
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Jen R.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
7y
Are you looking at apartments or SFR's? I find single family rent prices to be harder to nail down because there are fewer comps and they are harder to track. When I first started I kept a spreadsheet and tracked rental info for my area for several months, so that I could get a feel for market rates and how quickly places rented. Track whatever sources are popular in your area for listing properties (Zillow, Craigslist, FB marketplace, etc.). Within a couple of months I had a pretty good understanding of the market.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Bjorik Mutize Thanks, i haven't used rent-cafe before. I like the idea of gathering the comps too, that makes sense.
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Bjorik Mutize
Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
7y
Absolutely man. Plus with comps you can see what you can do to your units to achieve the same rent premiums. Sqft is a little harder to alternate (i guess adding a bed or bath) but for example amenities and appeal are easy to benchmark.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Jen R. SFR-4plex. Thanks for the advice, i have yet to explore fb marketplace and craigslist. Just so i understand, you are looking at listed properties for rent and keeping track of the rents that they are charging?
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Bjorik Mutize Yep the comps will def provide insight on some how each property is bringing in the rental income that they are as well as providing ideas on how someone could add value to the property that is being analyzed.
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Jen R.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
7y
@Justin Scott yes, every time a new rental listed, I would add it to my list (along with the address, beds, baths, and sq ft). Occasionally I would go back through and see how long the properties were listed before the vacancy was filled. I probably kept this up for 3-4 months when I first started looking into the local rental market, and it helped tremendously when it came time to set the rent for my first couple of properties.
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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
7y
@Justin Scott
I use Rentometer, Zillow, Trulia, Hot Pads, Apartments.com. I will use the MLS but not many rentals end up there. You need to treat it the same as flipping a property. Comps in the same area, number of beds and baths, etc. Look at how the properties are finished, amenities, and other criteria. I find rentometer and Zillow provide the best data.
Good Luck.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Jen R. thanks Jen, that’s is a good idea. I think I’ll give it a try.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Kenneth Garrett I was considering paying for the membership for rentometer, I just wanted to make sure it wasn’t a better way that to estimate rent. I used to trial and I liked it. I think coupling that with a few other ways to project rent would be optimal. I haven’t heard of Hot Pads so I will def look into that.
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Steven Pool
Superior, WI · Member since 2016 · 45 posts · 30 votes
7y
@Justin Scott
I use Zillow and Realtor and sometimes rentometer. I make sure that I use the right comparisons regarding how many bed, baths, square footage, amenities, and definitely location.
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Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
7y
@Justin Scott Outside of what has already been recommended on here, I would also get out into the marketplace you want to invest in and see how the rent translate to the area and mostly importantly the quality of the apartment.
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Mitch Brunette
Rental Property Investor · Burnsville, MN · Member since 2017 · 48 posts · 25 votes
7y
@Justin Scott
I self scouted and searched to get my own range and made my two deal decisions based on low end of my range. Audited with property manager after making my own range and in both cases PM knew more than me, and got me $200 more in rent on one, and $115 on the other with qualified tenants.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Steven Pool thanks Steve, I like all of those tools. They are really the only three I have used so far.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Michael Noto Im right right you Michael. I’m going to drive around my preferred area today to see how things are looking in that area. Then I’ll see what rents they are commanding.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Mitch Brunette i like that because if it’s a deal based on your low end of the range things can only get better. Checking with a PM after you have your range is the perfect way to double check yourself.
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Mitch Brunette
Rental Property Investor · Burnsville, MN · Member since 2017 · 48 posts · 25 votes
7y
@Justin Scott thanks for the quick response. I remember hearing a Tim Ferris podcast where someone said "if you can cap the downside, the upside will often take care of itself". Had nothing to do with real estate but that mantra has stuck with me and I've enjoyed it here in regard to REI. short term its been great as described above and longer term on my first deal rent went from $1700 to $1750 with next tenant and that tenant took an increase this year to $1775. Nice to get extra cash in bank incase rents ever go back down for some reason. Market is higher than $1775, maybe $1850-1900 but wasnt worth getting a new tenant when I have on time payers who have needed $600 in maintenance their first year (washing machine transmission and a couple closet door tracks) and would have to pay $1400-1600 in a new tenant leasing fee along with 8-10 days vacancy and any turnover costs and MY TIME. Good luck on your hunt. Im bored now while building capital since I just bought my second deal.
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Andrea Maddison
Rental Property Investor · West Hempstead, NY · Member since 2019 · 21 posts · 0 votes
7y
@Jen R. This is a great idea. I'm going to start doing this to assist with out of state rentals.
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Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
7y
@Justin Scott I have found the rental websites are best. Apartments.com and Craigslist are my main two but, there are others that work as well.
Irish Jones Realty4.947 Reviews
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Mitch Brunette thanks for the intel. Sounds like you made a good decision keeping the tenant knowing you could command a higher rent. You can be bored now, because when the captial come you will be ready to strike.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Matthew Irish-Jones somebody mention those above. I will def checked them out as I have yet to do so. Thanks.
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Mike Roy
Rental Property Investor · Bath, ME · Member since 2014 · 220 posts · 288 votes
7y
@Justin Scott - Every market is different, but go to where you can see the most comparable listings, whether that be apartments.com, Zillow or craigslist. Local PMs and investors are obviously good, but you can get a general feel online if you go to the appropriate source.
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Justin Scott
OP
Rental Property Investor · Jacksonville, FL · Member since 2019 · 69 posts · 29 votes
7y
@Mike Roy thanks Mike, that is the plan. Comps in the area I really need to improve in.
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Artie Wrightson
Charlotte, NC · Member since 2018 · 40 posts · 7 votes
7y
@Justin Scott we use Rentometer and it is worth the membership. We also use Craigslist, Zillow, Hotpads, and MLs for supporting comps.
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y
@Justin Scott The more sources you check the better because there’s not one perfect single source of information for every market/property type.
Here’s an article with a number of different sources you can check: How to Determine Fair Market Rent.
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