DOM for rental properties

[G Pyros]

Is there anyway one can search for the DOM for rental properties? Would like to see at what price points leases move in the market when pricing in a long term rental.

Thanks a lot,

[Eric Fernwood]

Quote from @Bill B.:

I assume the MLS can tell you for properties listed there, otherwise contact a local PM. I know @Eric Fernwood publishes the most useful data monthly for Las Vegas. You could ask him where he gets it and see if there’s an equal version in your market. 

Hello @G Pyros,

Thank you Bill for your kind remark.

As I am not familiar with any other market, I will explain how I determine the appropriate rental period for the properties we target in Las Vegas. Our target properties are mostly A-Class and are rented through the MLS.

Considerations:

Location

When evaluating properties, we usually limit our search to properties within a mile of the subject property. We also consider nuisances. For instance, a property located next to I15 is not comparable to a property located 1/4 mile away from I15, as shown in the aerial image below.

Below is an example of two subdivisions that are not comparable. The subdivision bordered in green has a much higher $/SF than the subdivision bordered in red. Although they are physically close and similar in size, they are not comparable.

Property condition is another factor. Below are two similar properties. The top property has tile floors and is highly upgraded and the other has carpet and not upgraded as much. The upgraded property rents for ~$200/Mo more than the lower property due to the condition and takes about 50% less time to rent.

Configuration

Even if two properties have the same total square footage and were built in the same year, configuration factors can make them dissimilar. For example, you could not compare the property shown below to a single or two-story property.

In Las Vegas, certain types of properties should not be used as comparables for most one and two-story homes. These include:

• Split level or tri-level homes
• Properties with short driveways
• Properties with a master bedroom smaller than 12 feet in any dimension
• Properties located near power lines
• Single-family homes with only a one-car garage
• Homes with tandem garages (where two cars are parked nose to tail)
• Properties with lot sizes less than 3,000 square feet

Seasonality

Depending on the time of year, the same property may take longer to rent than at different times of the year.

If we are in a slow period, I may look at time to rent in a high-demand period and balance the two.

“Recent”

In a slowly changing market, it may be possible to look back as far as 120 days. However, in a quickly changing market, even 60 days may be too long.

Inventory

A property can have a short time to rent when there is a shortage of rental properties may take much longer to rent when there is a lot of inventory available.

After Renovation

If the subject property is not in good condition, we typically choose comparables that are in a similar condition to the subject property after it has been renovated.

The Process We Use to Determine Time-To-Rent

1. We look for comparable properties that rented within the last 30 to 60 days within one mile of the subject property.
2. We eliminate properties that have issues or are not actually comparable.
3. We select or eliminate properties based on the after-renovation condition of the subject property.
4. We generally stay in the size; generally ±15% of the subject property SF.
5. For the segment we target, the lot size is not relevant as long as long as long as the lot size >3,000SF
6. We stay within ±5 years of the age of the subject property, if possible.
7. We try compare single-story to single-story and two-story to two-story.

Some Additional Thoughts

• If we find a significant variance in time to rent, it is likely that we did not select truly comparable properties.

• If a property takes longer to rent than expected, check the quality of its photos. For instance, based on the quality of the photos provided below, I would expect this property to take longer to rent.

• There is no online source for rental information. Most are wildly inacurate.

• Determining time to rent takes experience. I recommend finding an investment realtor in the market you are considering and work with them.

• Property managers are generally not great at estimating time to rent.

I hope this helps. Reach out if you would like to discuss this further.