How do you determine rental demand?

[Richard Arakelian]

How do I go about finding the rate of rental demand in a certain town or county? 

I'll look at some areas and I won't see many houses for rent, while in others I see many. 

How do I know if those areas with few rentals are places that no one rents or rentals are needed, versus those areas with many rentals which have too much supply or everyone rents there? 

Is there a metric that shows rental demand rates in given area?

[Ko Kashiwagi]

Hi Richard,

There are a couple ways to determine rental demand and I'd recommend cross referring couple of them:

1. Use an automatic software - softwares like Rentometer and BiggerPockets estimator can show average rent prices and comps

2. Look at rented properties online - websites like RentCafe, Zillow and Apartments.com show currently rented properties and you can get a sense of what is going for rent

3. Ask local investors/realtors - confirming qualitative data with professionals in the area is very important and you can ask them about the rental demands

4. Ask property management companies - you can reference a property you are trying to buy and get opinions from property managers, and sometimes they will even tell you how much rent can be collected

5. Check statistical data on the specific city/neighborhood - FRED and other city/government websites publish the number of people coming into the city, population density and local news can tell what businesses are coming in

Hope this helps.