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.
@Justin Scott I reccomend looking at Zillow or wherever you see most of the rentals listed on a daily/weekly basis. Filter on properties comparable to what you have or are interested in and watch how long they sit at their relative prices. If they go within a month they are priced right or below market. If they sit longer, the price is probably too high.
I always reccomend pricing slightly below market (relative to the quality of housing) to lessen turnover. Since doing this myself I've had 0 turnover in 3 yrs. So not only are my vacancy costs $0, my make ready costs are also $0. The extra $2-3k I could have made over the 3 yrs @ market rates would have been completely offset with replacing tenants each time.
Sounds like a good idea, what categories did you put down on spreadsheet to track? I have a whole until I can invest, that’d be a good move for me to do right now.
@Justin Scott hello. I like to use the Trulia Rentals app along with Zillow. I find the Trulia crime map and people metrics helpful in determining high crime and high rent areas.
@Andrea Curtis thanks, that’s what I have been hearing. Before I asked I didn’t know people used comps for estimating rental rates for an area. It makes sense.
@Justin Scott just use a stochastic partial differential equation and then validate it with a Monte Carlo simulation to make sure you modeled it correctly
@Justin Scott Not sure if others have mentioned this, but you can simply search for other properties such as the one you are trying to rent within a mile radius and ensure the finish somewhat match.
MLS site like Zillow or Trulia does the trick when you run out of Rentometer searches 🤗
From this appraisers view, it is important to consider the strength of the data as it relates to what you are trying to figure out.
There is a significant difference between an offered rental price and an offered sale price.
A sale price offering is usually at the whim of the seller, and influence of the agent, but very much will most often be placed at the highest end of the range to see what happens. This price is known to be, and often is, negotiable by market participants.
A rental price is usually set by a person with intimate knowledge of their own market. While it is negotiable, it is usually less so, most renters do not know this, an so therefore it usually is not negotiated. Therefore, the offering rental price is more reliable than a list price.
Of course prices are always variable and a person should look to the mode (most commonly occurring number in a data set) to determine what is most probable.
And as I am happy to see others already doing, it is smart to compare apples to apples and oranges to oranges.
The point is, rental data obtained from the places where landlords post their offerings is more reliable than a list price. Food for thought for all investors starting out and learning to be their own appraiser, which every investor must learn to do.
@Justin Scott I personally love rentometer to give me a quick dirty estimate on what the property might rent for. I also look for comps on local management websites to see what they are renting units for. You usually can compare some of the unit pictures to see if you think that your property will rent for more or less.