Rents weren’t what I expected

[Benigno Cunanan]

Purchasing a home at $66k. Memphis, TN 38115. Initially I thought the rents would be from $850 to $950, thIs was supported by my rentometer analysis, Zillow estimates and my Agent’s comp list of rents around the area. I was almost sure about thIs purchase until I spoke to one of the property managers around the area who knew the area and had a lot of houses managed close to the home I was about to purchase. She said that it would only bring in $650 of rent, and at most $695. My agent found It hard to believe it would only rent for that much and assured me comps suport 800 to 900 rents. This is a 3:2 SFH. The nUMBERS DoNT WORK WITH $700 RENTS. What do I do??

[Chris Clothier]

Originally posted by @Benigno Cunanan:

Purchasing a home at $66k. Memphis, TN 38115. Initially I thought the rents would be from $850 to $950, thIs was supported by my rentometer analysis, Zillow estimates and my Agent’s comp list of rents around the area. I was almost sure about thIs purchase until I spoke to one of the property managers around the area who knew the area and had a lot of houses managed close to the home I was about to purchase. She said that it would only bring in $650 of rent, and at most $695. My agent found It hard to believe it would only rent for that much and assured me comps suport 800 to 900 rents. This is a 3:2 SFH. The nUMBERS DoNT WORK WITH $700 RENTS. What do I do??

Benigno,

You're getting a lot of quick advice without anyone really knowing enough detail.

Maybe you have a bad agent, we don't know?  And maybe you called a lazy management company that wanted to give you low rents knowing that if you used them they would hit them with a constant stream of low-rent apps.

Without knowing the area, we cant tell you if it is a deal you should have pursued or not.  Never listen to one persons perspective when they are a service provider.  And never follow the advice of someone who gives it without the full picture!  

At $66k, I would be a little apprehensive about what you were buying and where.  That is absolutely on the low end for that zip code and for that reason, a $695 top rent may have been correct, while nearby you may be able to get higher.  

My advice for next time would be to talk to multiple management companies and specifically ask about the differences you are seeing on the rental aggregation sites. I would also check craigslist to see what is being listed there and ask your agent to pull any MLS rental listings. I don't think you had enough data, in my opinion, to put an offer on the house or to pull it once you made it. Never make offers out of a scarcity mindset. There is always time to have conversations and do some background due diligence before making an offer. If not and the properties are moving too quickly, then you don't have enough background on the area to begin with. Hopefully that last sentence made sense. If the market and houses are so hot that they move before you can do any verification, then you don't know enough about that market (i.e. rental rates) to be making offers.

Feel free to post the street you were looking at and local investors can give you a better idea of where the rents would be.

Best to you -