Every real estate investor should know the rental market for their area. Don’t think flippers and wholesalers need to know? Only landlords? Think again.
There are a ton of flippers out there who became reluctant landlords when the last real estate crash occurred. Flippers should always have a plan B in case their property doesn’t sell.
Why Wholesalers? Let me ask you this - Who is your market? Are all your buyers rehabbers? If so, how’s about you reread the previous paragraph…
Chances are you may have a bunch of potential buyers on your list that like the ‘buy and hold’ philosophy. They want a deal that they can rehab and rent out. The landlord buyers will be calculating what their cash flow will be with the rental market. Are you doing that calculation for them to make sure the deal is attractive to them?
Whether you have a specific area mapped out around your house, or you’re doing virtual wholesaling on the other end of the country, it pays to know rental rates. So we want to give you some websites that can really help to determine those rates.
The Top 5 ‘Market Rent’ Websites (In Our Humble Opinion)
1. Craigslist – The big one. The one where every landlord goes to list their property. You can get a pretty good idea of rental rates for the area with just 5-10 minutes of research. The obvious search is for your area’s name. But think of all the ways people spell it, search for zip codes and look for local attractions that landlords might put in their ads…
Then read the ads – don’t just look at the headlines. Don’t forget the pictures either – they will give you an idea of how much better or worse the other places are, compared to yours.
2. Rentometer – A very simple tool for determining rents. The first screen that comes up on this website asks you for:
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The Property Address
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The Rent Amount
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The Number of Bedrooms
From there, Rentometer calculates the rental rates for the area and lets you know how your rates compare. The display consists of a ‘speedometer’ to show you if you are in the ‘great deal’ (green), ‘reasonable’ (white) or ‘excessive’ (red) range for your area. It also has a map to show what rentals are in what range around your rental.
Beware – Rentometer receives its data from everyone entering in their rent, so if people are putting inaccurate data, you may not get a true picture. Remember also that you are only putting in the address and number of bedrooms. Rentometer does not take into account the number of bathrooms or all the ‘apartment bling’ you have added to your rental.
3. Zilpy.com – Zilpy uses a lot of data from its own proprietary database to determine what is a fair market rent for your area. All you do is plug in the address.
Zilpy will show you what it thinks is the number of bedrooms, baths and square feet. You can make corrections if that’s not right. After you hit ‘Yes – that’s it’, you are asked to sign in using Gmail or Facebook (to see who is using their site, they promise).
After signing in, Zilpy gives you a nice report showing the Google Earth picture, a range of what you should charge for rent and some nearby comparable rents:
If you scroll down further, you can also see the ‘Walking Score’ of being able to walk to local attractions (from WalkScore.com), and local schools from the GreatSchools website.
4. Padlister – Like Craigslist, Padlister is a great website to list your rentals, but it can also give you a good idea of market rents in your area. Potential tenants will use Padlister’s companion site, Padmapper, to find apartments for rent.
Padmapper will show you market rents in your area, and Padlister will let you list your rental on the site for free (and can also show you market rents).
When you go on either site, you just put the address of the rental in and ask the site to show you rents for similar properties by selecting ranges:
Then, Padmapper will show you a map of your area with other units for rent on other websites. If you hover over a rental, it will show you some details of the ad and (in many cases) a link to look at the ad. It’s a great way to see what your competition is doing.
5. Local Property Manager Websites – Just Google something like ‘Property Manager .’ Local property managers should take the time to do some pretty thorough analyses of what properties should command for rent.
After all, the quicker they rent the property, the quicker they get paid!
Just take a look at their listings and see if they have any properties that would be compatible to yours. If not, check out other property manager’s websites until you find one.
Overwhelmed with Data Yet?
Ultimately, fair market rent is nothing more than what a renter and a landlord agree it should be. But these websites above should give you a good idea. You should be able to see common trends after looking at several of them.
You might want to combine the information from these sites with your own experience walking around neighborhoods, talking to other local investors and running ads with different amounts to see how many calls come in.
Once you have a good idea of market rents, you will be able to determine if a property will cash flow. Whether you are buying the property or wholesaling it, the higher the cash flow, the better the deal will be.
Holla at us
Have you used one of these helpful online tools? We wanna hear about it in the comments section below.
Know Your Rents – Know fair market rent for your area. No matter what kind of real estate investor you are, it’s an important set of numbers to know. (It’s also good to know the different rent levels for different numbers of bedrooms and baths.)
Know Your Costs – Once you’ve determined your market rent, you can improve the cash flow by lowering costs. Or, if you are a wholesaler, you can show the costs are low enough that the property will cash flow if the investor/owner rents it out.
Compare Rents to Sales Prices – If you are looking at an area to flip properties, consider the end buyer and whether it’s cheaper to rent or purchase a property and make a mortgage payment. For places where rents are much lower than mortgage payments, it may be difficult to sell a flip to a non-investor/buyer.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.