How to find what a property will rent for?

Question

Hello all,

I’m learning all that I can about real estate and buy and hold investing. One thing I’ve found difficult when analyzing properties is how to find out what a property will rent for. I’ve heard that one of the best ways is to talk to a property manager. Will they answer these questions for me even though I don’t have any properties yet? Are there any other free/inexpensive ways to find accurate information regarding this. Thanks for the help in advance!

Teo

Hannah Cheadle · Answer

Yes, you can use sources like rentometer and Zillow rental manager to try to comp similar rentals and see what the market appetite is for a comparable unit. That said, finding the sweet spot for rent is an art not a science. One of my properties is a little dated but has a tremendous view. The online comps didn't account for that. Zillow said the high end of rent would likely be around $2900/mo. I listed it for that and got literally 100 calls in the first 24 hours...I knew it was listed way too cheaply and immediately raised it to $3100. My inquiry calls reduced to a more manageable 10 or so calls a day, and I was still getting quality candidates so I knew I found my sweet spot. I have another property for rent right now where the comps have it listed around $5k/mo but it doesn't have a full kitchen (more like an efficiency kitchen). This presents a situation where were looking for a niche tenant - someone who can afford to buy a home but has life circumstances leading them to rent and who also does only minimum cooking or eats out a lot. We've had to lower this rental price several times over the last few weeks to start driving leads. Remember it's always easier to start high and lower your requested rent than the other way around, and make sure you're exhausting all other marketing sources to meet the eyes of your Target tenant where they are looking before adjusting requested rent down. Ultimately, yes, active property managers should have a strong pulse on your local market and the sub-niches within your area to help you get the highest rental income amount while maintaining the value of your asset and matching you with well qualified tenants.

Good luck!

Ashley Nichols · Answer

rentometer.com

Trisha Witte · Answer

I've been keeping track over the last several weeks of what properties are coming up, where they are located, general condition, bed/bath count etc and the price they are renting for.  @Hannah Cheadle is right though, it's an art just as much as a science.

Drew Sygit · Answer

How serious are you about buying a rental? About hiring a PMC to manage it for you?

We get TONS of calls.emails from wannabe investors trying to pick our brains for FREE market info, WASTING our time!

We'll offer a bit of our time for free to help them and earn credibility, but then you have to hire us a pay a retainer fee or we cut you off.

Hopefully, you understand the economics of this and you're not one of "those" investors who thinks everyone should offer them everthing for free!

Michael Williams · Answer

Check the zip code of the property you're interested in on zillow, redfin, etc. and you can see how much similar units are renting for in the area and I shoot for the most conservative amount of income when doing my analysis. And drive around the area and see if its an up and coming neighborhood, is there a starbucks nearby, is it close to public transportation, how far is it from down town, these factors allow you to charge market value and you'll be able to increase rent over time.

Aaron W. · Answer

@Teodoro Vecchio Nothing will really beat a local property manager who works in the market/neighborhood you are looking to purchase your rental. If they are good, they should understand the trends, rents, and best ways to market your rental.

The free sites should only be used as a reference as they are not completely accurate all the time. I've noticed in the markets we invest in that sometimes it's high and other times it's lower than what the rental market is able to bear.

Speak with multiple property managers if you go this route. Not all property managers are created equal. There are good and bad property managers. Each one will have their own opinion of the market as well. You should go with the one you are comfortable working with and who shows the most competence and pride in their work.

Best of luck!

Account Closed · Answer

Before we purchase homes we always find the market price for rents by searching on zillow and other similar website for properties that are for rent on the same street or very close and we never had a problem getting those rent prices when we purchased a property. We never had to call a property management company when there is so much information available on the internet.

Casey Caton · Answer

@Teodoro Vecchio - Most good property managers should be up to speed on the latest rents - but not all of the time. I had one advise me on a lower rent than what I knew the market would support. How did I know better than the manager? By verifying the vacancy rate in my market, which shows the demand or lack of demand which drives rental rates. I sued BiggerPockets rent analysis tools, looked at comparable rentals on zillow, realtor, craigslist, facebook, and any other sites I could think of. This research gave me a clear picture of what my rent could be in my market, and it worked. Give that a shot, and you should be good to go!

Jonathan Hernandez · Answer

When I comp a rental, I use the biggerpockets rent estimator then I follow it up with a call to a local property manager to verify that's an accurate market rental rate.

nothing will beat calling a property manager, they have all the information you will ever need or want to make your final decision about a property.

How to find what a property will rent for?

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