How I Smashed the Zestimate Price on My Rental

My wife and I purchased a property with rents way below market value. We had to increase the rent for the property to make sense but for the property to really be worthwhile we had to increase rent far above what zillow thought they should be. Here is how we went from $1600 per month to $2,450 per month, $500 more than what Zillow thinks the rent should be.

1. The Right Location

Zillow will use a wide range to come up with its zestimates. A property next to a loud intersection will be grouped with a private quiet residential rental. Knowing the market and the areas that are desirable will give you an easy edge over the zestimate’s bulk average.

Remove tenants

If you have rents below market value and tenants are in your property they will have to leave. In this situation it's more than a matter of increasing rents, its bringing rent to a new level which will likely require renovations to the property or apartment.

Reconfigure

This is huge. The property (duplex) we purchased in this example was a 2 bed 1 bath (lower unit) with a very large pantry in a very outdated kitchen. This pantry was so large it had its own window, which ended up being a good thing. We converted the pantry to a half bath. We then converted a sunroom into a 3rd bedroom to make this unit a 3 bed, 1.5 bath. We also added a washer and dryer into the unit, in extra space next to the new half bath. The future tenants would now have a private full bathroom, a half bath for guests and no longer had to go to the basement for laundry.

Renovate

The rest of the unit needed major work to get to our dream asking price. We opened up the kitchen and living room, removed carpet, sanded hardwood floors, installed recessed lights, replaced kitchen cabinets, countertops and updated appliances. Fortunately a few months into purchasing the property some of the siding came off during a wild storm, I say fortunately because it validated what we ultimately should have done from the start; replace the siding for optimal curb appeal.

Luxury End Product

Our end product became a high end rental in the heart of a small downtown. The property attracts business professionals and small families that want a nice, safe, peaceful place to live and will pay to have it.

Finding pockets that will produce in your market takes local knowledge that Zestimates will not produce. Having a vision plays a huge part, many markets require you to make upgrades and create a property that previously did not make sense as an investment. RIght now as I look the price for our first floor unit is Zestimate at $1950. We are currently renting the property for $2450 with amazing tenants that enjoy where they live.