Can I charge more for rent If my property is close to the downtown area of a large city?

Question

I am looking to buy out of town property. I am familiar with the area and travel their frequently. I looked into the average rental price and I found that it was around 600 month plus utilities at the minimum.

I cannot locate any rentals in the immediate area on craigslist but rent-o-meter reports that the properties will rent for 850-900 a month.

I am nervous because I haven't rented any properties in this location before but It seems reasonable that I could fetch 850 a month plus utilities except water and I could easily make a tidy profit even renting as low a 550 a month.

Is the property worth investing in or should i stay away from it?

Aaron Mazzrillo · Answer

Essentially what you are considering is pro forma investing - buying something based on what you or what someone else thinks might be the best possibly scenario, and this is purely speculative at best. I highly encourage you to do more research and verify numbers through multiple sources before you sign your name on anything.

John E. · Answer

@Christopher Leon Does thou speakest of the Oracle at Omaha?Look at how he waves his wand and casts a spell !! HahaI definitely agree with you on that Chris! Warren is super close to his 84th birthday and the guy plays bridge in his spare time. His investing reflects him! It's nothing crazy, flashy, or the new 'it' thing. It's based on sound fundamentals and principles that have been applied for half a century. It's pretty cut and dry, but it works and now he's worth enough to buy every man, woman, and child a nice sandwich and a bag of chips. 19.7% annualized gain in book value isn't as sexy as day trading, but BRK/A just closed at 190,500 a share!------------------------------------------------------------------------------------------------------------------@Cory Mickler If rentometer says the rents are worth that it's a pretty good indicator, but Iike @Loren Whitney already mention to you on your previous question do the following... It's gold btw!Here's how I would start figuring it out:1. Check Craigslist and see what other people are asking for similar properties close by.2. Check the local newspaper and classifieds for similar listings.3. Visit rentometer.com, a rent comparison website.4. Go check out local rentals and pose as a potential tenant. This way you can see first hand what the competition looks like. At the end of the day, the idea is to offer a better deal overall. I haven't read any real estate specific books on marketing rental properties but any marketing book on the concept of pricing and value will give you good ideas.

Christopher Leon · Answer

a wise man once said invest in what you know. Respectfully, Sounds like you don't know. You can't rely on rent O meter to determine what fair market rent is. Also, it's not about getting top rent. It's all about the NET! Rent the unit at a fair but competitive price and your unit will stay rented longer and turn over quicker. The difference your talking about renting it out for can be lost in single month vacancy most of the time. I'd prefer to have the rent just a little lower to be competitive as to keep the unit in play longer. So keep it simple, don't be greedy, do your homework to determine what you can rent it for quickly while still attracting the right tenant. Good luck

Tyler Weaver · Answer

Drive the area, find a place for rent somewhere. Call them up, ask them how long it has been on the market, inquire about the condition, whatever will help you learn about the neighborhood. I suppose you could either call as a prospective tenant, or just be honest with them and say your an investor and had a few questions about how this market rents and would really appreciate just a few minutes of their time. Honesty will probably work better I bet. And hey, maybe they will sell you their rental!

Christopher Leon · Answer

Mike D'Arrigo · Answer

@Cory Mickler the way to find out what the rent is in an area is to pick up the phone and call a property manager who is familiar with the area. Rent-o-meter give you too broad of a range to give you more than some directional insight.

Michele Fischer · Answer

Every week I review the local paper and Craigslist and document what other landlords are offering for how much. Over a month or more that gives me very specific comparison data, and now that I've been doing it for years i have a ton of info, including how much rents have changed and how long other tenants are staying. I recommend doing plenty of research.

Cory Mickler · Answer

I would also like to know if there is another way I can verify how much rent I can demand in this location. I noticed a few places pay the water but the utilities are largely left up to the tenants in nearly every ad I have seen so I am assuming I can charge rent and utilities. I think I just answered my own questions here...