What is Market Rate for Rent?

Question

I have 2 rentals within a couple of blocks from one another and in the same sub-division. One is a 2b/2b the other is a 3b/2.5b. When I use rentometer to calculate the rental value the 2bd/2b is just under the 75% percentile and not in the red margin. The 3bd/2.5 bath is almost dead center in the reasonable rent margin. Zillow says I can charge another $100 per month on this house which would put it at just under the 75% percentile and not in the red margin.

Here are the questions, do pay attention to rentometer rankings to determine your rents? If so, where do you determine where to set the rent from? Do you stay out of the red our would put the rents you ask for in the red? Our market is a good rent market.

Thanks,

Ed

Here are the questions, do pay attention to rentometer rankings to determine your rents? If so, where do you determine where to set the rent from? Do you stay out of the red our would put the rents you ask for in the red? Our market is a good rent market.

Thanks,

Ed

Ed Morrison · Answer

Account Closed

Hi Elliott.  Thanks for your response.  We have never based rents on rentometer.  Current rent is based on exactly what you mentioned zillow and craigslist, trulia and some other site my wife likes.

Your comments are interesting about rentometer.  I never heard of them previously to reading BRRR this month.  I was under the impression it was more of as standard than what others see it as though and as such was thinking about incorporating it into our rental price determination.

Account Closed · Answer

@Ed Morrison I was under the impression it was a standard as well, when I had first subscribed to it in early '18. A year of use and I'd realized that their methodology is pretty limited. Unfortunately, there are many "standards" out there that just don't work. People use them anyways though. lol. Silver lining is there's plenty of room to do things better than others.

Account Closed · Answer

@Ed Morrison Rentometer has a pretty horrible data model. They use rental listings that have been "previously seen" on other websites for properties in the area. In any market, some landlords are going to list way too low, some too high, and properties vary widely in grade, layout, block, and other factors that rentometer data does not calculate well into the results produced.

Your best bet is looking at comparable listings on craigslist or zillow that have not been listed very long, and make sure you're researching each one to factor in location and quality of the property to fairly estimate your property's potential rents.

Anthony Wick · Answer

@Ed Morrison

I use actual listed “For Rents” on Facebook Marketplace, Zillow, Craigslist (less and less on this), and actual calls to places for rent asking what they are asking. All in my region/zip code/town. And I keep track of these even when I have no vacancy.

Ryan Huynh · Answer

You could also ask a property manager about what the market rents are for both of your properties in your area, along with checking Zillow and rentometer. Then you should be able to get a picture for market rates in your area.