Analyzing a rental properly

General Landlording & Rental Properties
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Analyzing a rental properly

Nathan Barshinger
Realtor · York, PA · Member since 2020 · 140 posts · 28 votes

I'm having trouble analyzing properties. I'm trying to analyze one every single day, just something on the MLS, it doesn't have to be a deal. However, when I look at the property description there's a lot of missing information. If I'm lucky, I'll be able to see the current rents and taxes but what about everything else?

Now I can use the current rents for the 1% rule, the 2% rule or the 50% rule as a rule of thumb and that's all fine and dandy but there's so much more information that I need to analyze.

If the rents aren't in the description is rent o meter a good place to find market rent? Also, what about the insurance?

Besides the condition of the property and possible repairs, what else do I need to know to analyze a property properly?

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y

Any computer algorithm is going to have flaws. They base rent rates on know facts like square feet, number of beds and baths, etc. They can't tell you if the flooplan is attractive, quality of flooring and landscaping, and other variables. Your best solution is to analyze the home as a rental yourself by comparing it to other comparable homes on the market. Tough to do at first, but you'll start building an understanding of the market and it will get easier.

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  • Brad HammondBusiness Member
    Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
    5y

    Hi @Nathan Barshinger, you found yourself in the hard part of analyzing properties. 

    1. Rentometer is ok but not great for rental estimates.  To get an accurate number you need to find rental comps in the area. I would use Facebook marketplace.

    2.  For the other numbers like landscaping and utilities, you should use a general number.  Research what that would be in your area.  You will also want to factor in vacancy, repairs, and cap-ex at 5% each.

    1Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    5y

    @Nathan Barshinger Use a different listing service. Zillow tells you nothing about non-residential properties; no rents expenses etc. Redfin gives you more details especially if you look for them. Try different sources.

    Also be a skeptic when looking at the listings often they will paint a very optimistic picture-like assume rental income as if all units fully rented. Property taxes at some long ago rate and low valuation. Or expenses leaving out key items like water and sewer. All the best@

    1Reply
  • Tammy Mason
    Investor · Fontana, CA · Member since 2020 · 128 posts · 94 votes
    5y

    @Nathan Barshinger

    Real estate is all local. Rentometer is a great resource to get a rough estimate on rents. Also check for active rentals on Zillow and FB Marketplace. Aside from the condition of the property and possible repairs, you also have to analyze the neighborhood from every angle such as crime rate, employment rate etc.. Neighborhoodscout and scopeout are some good resource for this.

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    Any computer algorithm is going to have flaws. They base rent rates on know facts like square feet, number of beds and baths, etc. They can't tell you if the flooplan is attractive, quality of flooring and landscaping, and other variables. Your best solution is to analyze the home as a rental yourself by comparing it to other comparable homes on the market. Tough to do at first, but you'll start building an understanding of the market and it will get easier.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    1Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Brad Hammond

    I sure have! Haha

    Gotcha, I'll do that! I didn't know if there was anything else I have to take into account. It sounds so simple!

    0Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Bjorn Ahlblad

    Much appreciated! I was actually using the Realtor app but I'll check out Redfin.

    I always try to be skeptical of what the property descriptions say and not takimg them for face value...that's one reason why I'm having trouble analyzing.

    1Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Tammy Mason

    Gotcha, yeah I try to search for a neighborhood with decent schools

    0Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Nathan G.

    So I should look at what other rentals look like and are going for in the same neighborhood to get an idea of what I'll be working with? Also to see what other people paid for their rentals?

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y
    Originally posted by @Nathan Barshinger:

    @Nathan G.

    So I should look at what other rentals look like and are going for in the same neighborhood to get an idea of what I'll be working with? Also to see what other people paid for their rentals?

    Exactly. If you're in a small town, it may be difficult. If you're in a larger city, there should be plenty of online activity to help you.

    Keep in mind you are just practicing. It's good to be accurate, but don't kill yourself trying to analyze deals you have no interest in making offers on.

    If you can find listings locally, why not go through Brandon's practice properties? I think he has one every week so you can probably go through dozens of videos, analyze the data, and see how your results match up to his.

    The DIY Landlord Book4.7248 Reviews
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    1Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Nathan G.

    I had no idea he has a "practice property" every week. I'll go check them out!! Thank you.

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y
    Originally posted by @Nathan Barshinger:

    @Nathan G.

    I had no idea he has a "practice property" every week. I'll go check them out!! Thank you.

     I realized I should have just pointed you to them, but now I can't find them. I think they were weekly live-streams that you sign up for. If you go to EDUCATION>WEBINAR you can see what classes are coming up. I don't see any for live property evaluation so maybe he doesn't do them any more? I'm sure they are all in the WEBINAR ARCHIVE but you need a PRO or PREMIUM membership to access that.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    1Reply
  • Nathan Barshinger
    OP
    Realtor · York, PA · Member since 2020 · 140 posts · 28 votes
    5y

    @Nathan G.

    I appreciate it, I was debating on getting a pro membership...

    0Reply
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