How to estimate the rent?

[Navya Rajput]

Hi All

I am primarily interested in rental properties (Buy and Hold Investments). While I was looking for SFHs and MFHs in my area and trying to analyze some properties I was getting confused regarding how to estimate the rentals I can earn from the property or specifically from each unit in case of MFHs?

Is this something you can estimate only by visiting the property in person or is there a way which can give a ball park range regarding the rents? What I am doing up till now is estimating the rents by comparing them from the rents asked by large apartment owners from apartment.com and rent.com for comparable units. Is this a logical way to get a rough estimate on the rents?

Using the above method I found that most of the properties would generate a negative or probably zero cash flow (though the returns from them would significantly reduce or even sometimes completely cover my rent but the overall cash flow is -ve or 0). Would such deals be considered good? OR good deals are only the deals that generate some +ve cash flow?

Thank you :)

Regards

Navya

[Jim Adrian]

I have seen the range of 1.1% to 0.8% of the property value based.  The lower the value of the house the higher %. Use 1.1% for $100K house and anything over $200k use 0.8%. This is a guideline so remember market will dictate the price people are willing to pay.  Craigslist is another source to use.  Zillow seems low for my area.  I would look at several sources and use a guide to create a check and balance. 

examples

$100,000  x 1.1% =  $1100 rent

$200,000 x 0.8% =  $1600 rent