How to decide rent amount for a single family house

Question

I saw a single family home in West Haverstraw, NY (Rockland County) that, to me, looks like a good property for single family rental (I'm still doing my research). My questions are, if I buy it, should I set the rent higher than the mortgage payment? Make them responsible for all maintenance, other than major repairs? To me, they may as well buy a house if they are paying for almost everything. And does anyone know about the demographics in this area like are there a lot of blue collar families? Is it a good place to rent single family homes? I did a search on redfin but saw nothing for rentals in this particular area.

Nathan Gesner · Answer

Based on your question, I recommend you spend a couple weeks educating yourself on some basics before diving in. 1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss. 2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey. 3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes. 4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you. 6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education. You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Patrick Drury · Answer

@Sean FraserCheck rent comparables in the area and rent it out accordingly. If the mortgage is more than rent comps suggest you could get then you won't be able to rent it out for more than the mortgage.

Jake Knight · Answer

In our market, it's important to get rent comps from local experts. This city is so inconsistent and certain areas are changing rapidly.

Becca F. · Answer

@Sean Fraser I have a SFH rental in the Indianapolis metro area and I found that the comps provided by my agent were accurate. My rent was right in the range of the comps. When I looked on Rentometer, it overestimated my rent. My property manager who also owns duplexes and an apartment building said that Rentometer isn't always accurate - it can be under or over. For another property in California, I think Rentometer is underestimating it according to my realtor but I'll find out soon when I get tenants in (not listed yet). I also looked on Zillow Rents and rents were all over the place but it helps with getting a wide ballpark range of what you could get for a property in similar condition.

Collin Van der Veen · Answer

If you plan on using a property manager, they will have a great idea of what the local rents are as well at the neighborhood level.

Sergey A. Petrov · Answer

Look at comps. Your mortgage has nothing to do with how much a property can rent for.

Sean Fraser · Answer

Thank you everybody.

Sean Fraser · Answer

Nicholas L. · Answer

@Sean Fraser yes - ask an agent.

Sean Fraser · Answer

Thank you. Is there a way for me to find out if any single family homes are being rented if it's not shown on redfin?