How to Estimate Rents

[Alexander Tesfamicael]

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!

[Lee Ripma]

@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.