Hey local Spokane investors!
As a new investor one of the hardest things I've found is when "running numbers" in the BP calculators the input for monthly rent is a major "guess" for me. There have been a lot of other challenges too but most I can verify with hard metrics, somewhat scientifically. It makes me a little anxious when an important input is a MAJOR guess.
I just joined Rentometer as a pro member and its got some decent features but I have to admit, I don't know what they're doing behind the curtain and wonder aloud here how well they do here in Spokane. I assume that the math they use is location agnostic but I am wondering:
a) anyone here use rentometer and found it accurate?
b) anyone feel an experience human like a savvy realtor or property manager has better estimation skills.
I have just started reaching out to Property Managers by the way... I do intend to use one if financially feasible.
@Jeffrey M. rentometer, as far as I can tell, crawls listings in a radius around the address to ascertain their numbers.
I suggest corroborating the results you're being given with other sources. For example, below is a distribution of rent rates aggregated by bedrooms. The y-axis is the number of units in Spokane that have rents of a specific range.
If the numbers match up with what you are seeing then it's looking good, if not there may be more to investigate.
The data comes from the american community survey
@Jeffrey M. In my experience Rentometer is not great for the Spokane area. There are alot of very nice expensive areas in close proximity to the lower income areas that skew the numbers.
For example look at Kendall Yards proximity to West Central, Manito and Perry Streets proximity to lower south hill. Similar size and age properties will very by large amounts in those 2 comparisons and there's micro versions of that all over Spokane.
I have found the best method to be looking myself at compatible rental listings on Zillow and working with my property manager rather than relying on Rentometer.
@Michael DeHaan is spot on. Rentometer is great in areas with more homogeneous communities - like Phoenix suburbs.
I canceled my Rentometer subscription today. My PM had way, way better intel, basically a $250 swing in rental price (with rentometer basically being $250 too low).
Would it be wise is situation s like this to work more off the 2% rule?
I live in Spokane and use Rentometer but also complement that with my own knowledge of the market and using Trulia, Zillow, and Craigslist to check also. I actually analyze just about every property that Rentometer pulls up and I eliminate outliers. That is some properties are too low and when you look at the details they are maybe not comparable. I also look at the high ones. My rentals are 40 years old in the process of being upgraded and are not comparable to a brand new duplex...hence the $300 difference. I like it as a tool and with renew my subscription when the time comes. With that said, my own independent research was just as good if not better.
For what it's worth I am a property manager here in Spokane and its my personal opinion that Rentometer can estimate pretty high. They are always consistently higher then I would have estimated, I think everyone looking to buy multi-family property should consult with a property manager if they are unsure on the rates.. I help people all the time with estimating these on purchases, happy to do the same for you @Jeffrey M. feel free to PM me if you ever need.
@Jason Hammond thank you. I did look up 2% rule a while back but being very new to this I have been unable to locate any deals that meet the 2% rule here in Spokane *in* the neighborhoods I am looking in (specific parts of the south hill, so perry, garland, etc.). I'm not saying they don't exist, I'm saying my skill level (newb) has yet to uncover any. I am getting wholesale deals in my inbox and MLS emails too but I'm looking for specific areas that I have a comfort with and renovations that I feel I can tackle financially and mentally. In fact on my first REI which I closed 2 weeks ago, according to the 2% rule I should charge $3980 a month in rent but the spec and location of the house after renovations will be around $1400. Did I get ripped off? Maybe? I got it 20K below asking and putting about that much into it and at 1400 I can cash flow a few hundred a month. So, to answer your question, 2% rule doesn't seem to work for me. My approach was to use the BP calculators and check the cash flow and of course that relies heavily on a projected monthly rent value which is why I posted this message. If you're able to make the 2% rule work here in Spokane, I want some of that juju you have! ;) :)