How to Estimate Rents

6 Replies

Hi BP Community - 

I'm a real estate investor looking to buy a triplex or fourplex in the Houston, TX market. I'm wondering what tools/websites investors use to quickly estimate the rental income of a MF property. My goal is to get to the point where I can look at a triplex or fourplex and know whether it'll pass the 1% rule or not (where the predicted total rental exceeds 1% of the purchase price).

As I churn through analyzing deals, my concern is that I'm inaccurately estimating rental income of the property because each property usually has its own mix of bd/br/sq ft. In comparison, this process is MUCH easier for single-family homes.

I understand that a realtor with access to the MLS can get a pretty accurate read with a quick CMA, but I'm talking as an investor without access to the MLS doing initial analysis to send the more promising deals to my realtor.

My current process is:

- go to https://www.zillow.com/rental-manager/price-my-rental/

- go to https://houston.craigslist.org/d/apartments-housing-for-rent/search/apa

Search for units that as closely as possible match:

  1. 1) Location of the property
  2. 2) Number of bedrooms and bathrooms of the unit I'm estimating the rent for
  3. 3) Square footage
  4. 4) Amenities such as air conditioning, parking, shared common spaces
  5. 5) Condition of the unit

Thank you in advance for your help!

Hey Alexander, 

The best ways to analyze rents quickly and free would be. Craigslist comps, or rentometer in certain markets. If you are willing to pay for a service BP offers the new "BP insights" which I have found works pretty well.

It may not be a perfect assessment but it will usually be close to the fair market rents for your area.

If you have any other questions don't hesitate to reach out. I'm always down to make connections and talk REI!

@Alexander Tesfamicael

I use rentometer and then I find actual comparables with it. A quick and dirty that I've found is that with a nice finish I can usually push 50-75/mo more than the median rent on rentometer. Just make sure you actually look at the comps and use true comparables. I can do it pretty quick to underwrite MF on a first pass. Then I'll really dig in and pull comps on apartments.com, pad mapper, Craigslist, and Zillow. I don't find it too hard to pull MF comps. The BP insights info seems to be for SFH and didn't seem very accurate to me when I looked at it. MF units rent for less than SFH units.

@Alexander Tesfamicael

Great question Alex.

Unfortunately no shortcut. You will get quick and efficient with your MF deal analysis after you analyze more than 100 deals.

Zillow Rent is not accurate. I typically advised my clients to use 85% - 90% of Zillow's estimated rent.

Craigslist is also good - Just make sure you are comparing apples to apples 🍎

As @Lee Ripma mentioned and that I confirmed with you, MF rent less than SFH.

Continue to put in the work and your eyes will eventually be trained to spot great deals from 1 mile away 😀.

Rentometer is pretty accurate and I rely solely on it for years before I became a Realtor.

BP Insight is also not 100% accurate, especially for Multi-Family.

Once you crush your numbers and you want to confirm your numbers on a property that checked your criteria, then reach out to your Realtor for comparable as this is part of their job and fiduciary duty to you as their client.

You have the right mindset and attitude.

Keep crushing the numbers man!

Goodluck and reach out if you need true comparable.

Originally posted by @Wale Lawal :

@Alexander Tesfamicael

Great question Alex.

Unfortunately no shortcut. You will get quick and efficient with your MF deal analysis after you analyze more than 100 deals.

Zillow Rent is not accurate. I typically advised my clients to use 85% - 90% of Zillow's estimated rent.

Craigslist is also good - Just make sure you are comparing apples to apples 🍎

As @Lee Ripma mentioned and that I confirmed with you, MF rent less than SFH.

Continue to put in the work and your eyes will eventually be trained to spot great deals from 1 mile away 😀.

Rentometer is pretty accurate and I rely solely on it for years before I became a Realtor.

BP Insight is also not 100% accurate, especially for Multi-Family.

Once you crush your numbers and you want to confirm your numbers on a property that checked your criteria, then reach out to your Realtor for comparable as this is part of their job and fiduciary duty to you as their client.

You have the right mindset and attitude.

Keep crushing the numbers man!

Goodluck and reach out if you need true comparable.

What do you think about Dealcheck estimate?

 

Originally posted by @Joel Calkins :

Hey Alexander, 

The best ways to analyze rents quickly and free would be. Craigslist comps, or rentometer in certain markets. If you are willing to pay for a service BP offers the new "BP insights" which I have found works pretty well.

It may not be a perfect assessment but it will usually be close to the fair market rents for your area.

If you have any other questions don't hesitate to reach out. I'm always down to make connections and talk REI!

How do you find comps in Craigslist? 

 

Originally posted by @Ari Hadar :
Originally posted by @Wale Lawal:

@Alexander Tesfamicael

Great question Alex.

Unfortunately no shortcut. You will get quick and efficient with your MF deal analysis after you analyze more than 100 deals.

Zillow Rent is not accurate. I typically advised my clients to use 85% - 90% of Zillow's estimated rent.

Craigslist is also good - Just make sure you are comparing apples to apples 🍎

As @Lee Ripma mentioned and that I confirmed with you, MF rent less than SFH.

Continue to put in the work and your eyes will eventually be trained to spot great deals from 1 mile away 😀.

Rentometer is pretty accurate and I rely solely on it for years before I became a Realtor.

BP Insight is also not 100% accurate, especially for Multi-Family.

Once you crush your numbers and you want to confirm your numbers on a property that checked your criteria, then reach out to your Realtor for comparable as this is part of their job and fiduciary duty to you as their client.

You have the right mindset and attitude.

Keep crushing the numbers man!

Goodluck and reach out if you need true comparable.

What do you think about Dealcheck estimate?

 

I have not try Dealcheck estimate out because I am a Realtor with access to more accurate information.

You can try them out on a free trial and see if it meet your expectations.

Goodluck