4 ways I verified rental comps for my house hack

                                4 ways I verified rental comps for my house hack

                                                             “Stay Hungry”

So about three weeks ago I closed on my first House Hack in New Jersey. The property I purchased was a flip property so it was move in ready in theory. Because I knew this would be my first house hack and property in general, I made sure to assume that the first month would consist of me having to fix a couple of things here and there and I also assumed that I wouldn’t be able to find a tenant for three months. Now of course I was exaggerating with some of these projections but I rather think worst case scenario while hoping for the best then the opposite.

So as it turned out, I was right about the property needing some work even though the property was “move in ready”. The first thing I had to do was update the electrical panel and ground the electrical meters outside. I had to replace the exhaust pipe for one of my water heaters. I had to replace some of my corroding cast iron pipes with PVC pipes. Besides that a lot of little things popped up that I had to take care of. This took about a month. For some people that might sound like a ridiculous amount of time to do a couple of minor things like that but because I work a 9-5 Monday-Friday and after that I go to the gym, by the time I get home and eat, it’s about 7:30pm. This wasn’t a big deal for me because I had already planned for this.

When I finished with everything on my to do list, I decided to begin verifying my original rent comps before putting the rental unit up for advertising. I did four things to verify the rental comps in my area so I can make sure I am getting the most rent I can in my area while still staying competitive. The first thing I did was ask my agent about his rentals. The second thing I did was put posting up on Craigslist without the address of the rental to see how many hits I get. The third thing I did was use Rentometer.com. The last thing I did to verify my rental comps was to go on Zillow and track similar rentals in my area and check which ones move quick and which one last long in the market and why. These four steps led me to make a decision that has led to 270 people viewing my property in two days and scheduling 8 people to see the property the upcoming weekend.

1.Ask agent if they have their own rentals about the comps

One of the many things that led to me working with the agent that helped me close on the property was the fact that he had his own rental portfolio. This was really important for me. Besides the fact that he helped me find a property that is investor friendly, he was also able to understand that I wasn’t looking for the best views or biggest lawns or biggest kitchens. Instead I was looking for a property that would help me make a solid cash flow every month with a chance of appreciation. Not only was he able to find just that for me, but he was also able to show me his rentals that were similar to mine in the same neighborhood so I can have a feel for what I can get around here. Another important thing he helped me with was to understand what Landlords are normally in charge of in terms of utilities in this area. What I learned was that even though the water in the property was separately metered, Landlords in this area almost always pay for the water. That was some great insight that I am sure is going to help me advertise in a more competitive way. This might not seem like a big deal for someone who is already a vet in this real estate game, but for me this was really crucial information that helped me advertise my unit as completive as possible.

2.Advertise unit on Craigslist without the actual address

This sounds a little sneaky but it’s effective. Once I got my offer accepted on the house, I quickly put up a post of a home in this neighborhood with similar features to the one I got an offer accepted on just to see what kind of demand was in the market. I did the same thing once I purchased the house and wanted to verify that there was a demand for this kind of property. To do this, you have to be very specific and do not include an address. Just include the cross streets. I also made sure to respond right away to anyone that sent me message stating that “the rental is no longer available” so I don’t waste their time. Once again, this method might be immoral and I understand if you didn’t want to do it, but it is really effective and it gives you a solid look at what to expect when putting your actual rental up for advertisement.

3.Rentometer.com

Rentometer.com is a website where you can plug in your address with some of your details like how many bedrooms and bathrooms your unit has and the website searches for rentals that fit that criteria and it shows you how much rent is being charged in that area for apartments similar to yours. So far the Rentometer has been pretty accurate. I am not sure if it is accurate in every location so make sure to use various resources to confirm. The only knock I have on the website is that it doesn’t specify if utilities are included in the rents they are reporting. I personally assume that the rent numbers don’t include utilities and just analyze my comps without the utilities included. Rentometer gives you 5 free tries a week to use their service. Now because I analyze properties daily, I subscribed to their yearly subscription.

4.Track similar Zillow rentals

The last thing I do to verify comps is to do my own investigation on Zillow. For example, I am currently advertising a three bedroom, one bathroom in Rahway, New Jersey. One thing I did to see how fast rentals were being taken off the market was to track 5 rentals that I found were similar to mine. I check to see how many views it had. I also check when the listings was posted. I then track the listing to see how long it lasts in the market. After analyzing the properties, I check to see why certain listings come off the market fast and why others take really long to get rented. For my area things like price, amenities, and utilities play a factor. This in return helps me figure out ways to make my rental more competitive in the market. The important thing to understand is that what makes people want your rental in that area.

Conclusion

I am writing this while waiting for people to come to see my rental. Something that I just learned is that instead of doing individual showings, I should have done an open house. Out of 10 appointments, 4 people have showed up. I wanted to share this because I have learned that the best way to learn is to do. You can read all the books in the world, but nothing beats “just doing”. So learn everything you can but don’t get caught up trying to learn every single thing because you’ll never start. Sooner or later you just have to do and take action!!!!