How can I estimate demand in a rental market?

How can I estimate demand in a rental market?

Homeowner · Canton, GA · Member since 2014 · 16 posts · 5 votes

I need some advice on testing demand in a rental market before I make an investment in rehabilitating my family's rental properties. I have heard people say they placed ads for their potential rental to see how much interest they could generate. How does that work? How do you respond to inquiries? What other ways could I use to gauge demand? A local agent told me that most landlords in the area don't use property managers, so information is hard to come by.

This is the background: We own 7 rental properties in rural South Georgia: 4 small houses and 2 trailer pads. Our mother inherited the properties from her mother and put them into an LLC to pass on to my 4 siblings and me. Our mother has been the manager of the LLC and of the rental properties. She is closing in on 93 and finally admitted she needed help and was willing to make me her co-manager. I went down yesterday to assess the situation. Four properties have been rented well below what I believe is fair market rent. I knew it would be bad but holy crap! Three of the houses are empty. One is being repaired due to storm damage and needs some additional rehab. The other two need more extensive rehab but could be put in rentable condition. The trailers are not ours, just the pads. But, I'm going to have to evict two of the trailer tenants and I am pretty sure they will abandon the trailers. So, I potentially have two more rehab candidates. I can work out the potential return based on expected market rent but need some feel for housing demand for the type of rental property we have.

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  • San Luis Obispo, CA · Member since 2017 · 40 posts · 14 votes
    7y

    I use the three that I see most often on this forum: Rentometer.com, Craigs List, and real estate web sites like Zillow.

  • Homeowner · Canton, GA · Member since 2014 · 16 posts · 5 votes
    7y

    Thanks, Will. I have used those to get an idea of rental prices. What I am looking for is a way to estimate how many potential renters would be in the market for my rental. 

  • Rental Property Investor · Nolanville, TX · Member since 2008 · 130 posts · 88 votes
    7y

    @John Thomson

    I've had this same question. We have a great market but considered branching out and didn't know how to assess other areas. Not for price, I know how to do that, but demand. How long will the rental sit vacant?

  • Investor · Blackshear, GA · Member since 2017 · 13 posts · 7 votes
    7y

    If it happens to be in southeast GA i might be able to help you out.  I’m in Waycross area. I’m betting you could reach out to real estate companies who also do property management who may be able to give you an idea of what you’re looking for.  Our area has way more potential renters than properties in the price range mine are in.  Any time we have an availability it is rented within a week.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    look at the vacancy rates in the area.  Also look online at the listings and see how long they have been up.  Monitoring the rental ads will tell you how quickly they disappear.

  • Real Estate Broker · Minneapolis, MN · Member since 2016 · 530 posts · 398 votes
    7y

    @John Thomson

    Metrics you could look at may include you markets vacancy rate, DOM’s, and market trends with rent increase or declines. Usually just by these metrics, you can get a high level overview of where demand may be going.

    Also, you could speak to surrounding brokers and property management companies to get secondhand opinions.

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    7y

    @John Thomson the answer is, in the very basic 'big picture' (skip to last paragraph for small picture), the numerical 'volume' of net migration to your area. Sure, you can have the 'best' rental available and it will always be occupied because you have the best rentals.  But statistically, a positive net migration means you will, all things being equal, have a better chance to rent a property vs. a negative net migration. 

    Knowing nothing about your area, I would ask: what are the most recent county, city, and local demographics? Did Canton GA (or Cherokee county) land a new auto manufacturing deal lately? Will there be a positive net migration to the area? These are important short term, potentially long term. 

    That's the bigger view... 

    On a smaller scale, just call a local broker (better: call all top players, hopefully there are 3-5) and tell them you have 7 properties that you want to place in their rental program, and want details on how their rental management operation works. That's step 1. From there, learn the local demographics and position your properties accordingly. 

  • Homeowner · Canton, GA · Member since 2014 · 16 posts · 5 votes
    7y

    Thanks for all the advice, everyone. I will give it a go. If I discover any new secrets, I will pass them along.

    @Lindsay Linton, you’re in the big city compared to us. Our property is near Soperton! It's not the market I would choose to invest in, but it’s the one we’re in.

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