We’ve discussed the expense side of the cash flow equation in a previous post here, but how does one go about estimating a reasonable rent? There are several main sources:
Craigs List – Most landlords in this area go the ‘do it yourself’ route and list their properties on Craig’s List, which is free. Local renters know this is THE go to place to find rentals. Unfortunately Craig’s List postings, while plentiful, are only live for about a week, and once they disappear it’s tough to know how much the home was actually rented for. In addition, there’s no easy way to tell how many weeks the landlord had the posting up there before they found a renter. It’s wise to start monitoring Craig’s List ads at least a month before you list your own property for rent, to get an idea of rentals in that neighborhood.
Multiple Listing Service – Some landlords hire real estate agents to list their property in the MLS. This is a very reliable source of data and an agent can quickly tell you how many days the property was on the market and what the actual agreed-upon rent was (not just what was advertised). However, as noted above, most landlords rent units themselves to avoid the brokerage fees, so this data, while accurate, represents only a sliver of the market.
Nearby Apartment Buildings – If you’re renting a condo, your primary competition is nearby apartment buildings so check out their websites and, more importantly, call them up! They frequently have unadvertised specials, and that represents your true competition.
Rental Estimation Websites – A variety of websites like Rentometer.com are very helpful in aggregating data from several third party sites to let you easily compare your rent to the nearby advertised homes.
If you need help identifying a good investment property, please contact us.