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Updated over 8 years ago on . Most recent reply

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how is everyone determining rental rates for properties?

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I've been crunching the numbers on many potential properties for my first REI. I'm looking at MFH for buy and hold rental properties. However, whether the property is going to cash flow positively depends heavily on getting the rental price correct. So, what tools are you guys using to estimate the rental "comps"? I'm using realtor, zillow, craigslist, rent.com, rentometer.com, etc..

Do you use a real estate agent? if so how do you find one that is knowledgeable about the rental comps, and not just the property value?

Specifically I've found a Quadplex in Casa Grande, az, It should cash flow very positively for me, but I'm nervous that I'm not doing enough legwork. The quad is 4x 2bedroom units, my research tells me they should rent for $550-$600.  I've verified that next door is a triplex of 1 bedroom units that are currently occupied by renters at $425 per month.. I'm concerned that I've discovered a 1 bedroom difference that supposedly accounts for $150 monthly  difference..  Certainly the owner next door could just be under charging for rent, but how do you guys go about this?

Also any specific advice for looking further into this property in Casa Grande? know any agents or investors in the area?

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Mike H.
  • Rental Property Investor
  • Manteno, IL
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Mike H.
  • Rental Property Investor
  • Manteno, IL
Replied

The best way to determine rents is using the sites you list above.

The key is that the main factors in rents are the space and the finish.

And can a bedroom add 150/mo? Yes it can. But I would want to know all the differences. 
i.e. How many square foot is the 1 bedroom? 

When you get into that 1/1 bath 600 sq ft versus 2/1, 850 sq ft, thats a big difference to where 150/mo difference is not that much. Thats 25% larger.....

To get rental rates, I'd worry about 2 bedroom units nearby and see what they're going for. Hopefully, ones that look about the same finish as you plan on having there.

But remember to keep square footage in mind too. Thats a big driver for determining rents. 

2bdrm 1,000 sq ft is much different than a 2/750 sq ft place.

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