In managing rental property, it is extremely important to know what comparison properties are renting for. If you’re charging too much, you’re likely to be sitting with vacant units. If you’re selling yourself short, you’re leaving profits on the table.
What is Market Rent?
Market Rents simply refers to the going rate for rental properties in a specific area.
Ultimately, your rent is determined by what the market will absorb. The most important information you’ll need is what other landlords are charging their tenants. Some additional variables that you will want to take into consideration include:
- How many bedrooms and bathrooms are included?
- What utilities are included?
- Will you be including garage parking or storage?
- Are you offering additional benefits like “free” WiFi?
- Will you allow pets and charge a pet rental fee?
- Will the property be furnished or not?Use the questions above along with any or all of the resources below to create a database of rental rates for your properties.
How to Determine Fair Market Rent Rates for Your Rental Property
1 – Farm Your Neighborhood
The most obvious way to figure out what rents in your area are is to drive the neighborhood and call any “For Rent” signs that you see on similar properties to yours. Once you’ve got a large enough sample, you can simply average out the data.
2 – Check the MLS
You can contact a local real estate agent or check for listings on Realtor.com. As you would in #1 above, simply average out the rates for similar properties and you’ll have your fair market rent.
3 – Check Out Rental Listings on Craigslist
Craigslist is the largest classifieds site on earth and has a huge volume of rental listings for almost every city and town imaginable.
4 – Contact Local Property Management Companies
Who would know better than local property managers what the going rates for rental houses or apartments in your area are? These companies should have a good idea of the going rate for your unit.
5 – Ask Members of Your Local Landlord Association, Real Estate Club, or BiggerPockets
Another great way to get this information is to ask the other landlords you know in your area. Whether you’re contacting them at the local meetup, REIA, or even right here on BiggerPockets, your peers can be an invaluable resource for rental data and other important information.
6 – Check Your Local Newspaper or Newspaper’s Website
While the local paper is disappearing in many municipalities, these are great resources for local for rent listings, which can be used to determine your average rents.
Automated Market Rent Determination Tools for Landlords
These rent comparison tools will help you determine fair market rents for your rental property.
- Padmapper – Enter a zip code and find local properties for rent (from Craigslist). Click on a local listing for rent rates as well as a calculation that tells you the price and percentage that listing is above or below other nearby similar properties.
- RentBits – Track average rental rates for the last 14 months via the Rentbits directory.
- Rentometer – tool for comparing rent rates.
- Zillow – Zillow has its own “Rent Zestimate” data that can be found by entering any address into their search.
Additional Free Rent Determination Tools
- Basic Allowance for Housing (BAH) Calculator – The BAH is how much the military gives military families for housing expense. BAH is determined by geographic duty location, pay grade, and dependency status. This data can prove to be helpful to landlords focusing on members of the military or anyone else.
- HUD Determined Fair Market Rents – Section 8 rent determinations, but useful for learning about your local market rents.
- City-Data.com – A massive database of information about cities and towns, including rental data.
- Inflation Calculator – Great for keeping up with inflation data and using this information in making regular rent adjustments.
Paid Tools for Determining Rents
- RentRange – RentRange gives rental rate estimates for specific addresses, by zip code and city, as well as offering rental rate historical trends, property and MSA vacancy rates, rental market strength indicators, comparable rental property information and rental price per square-foot data used by industry leaders. Price varies based upon report.
Also See: Finding Fair Market Rents & Vacancy Rates: Boots, Clipboards, And REAL Research