Determining Market Rent?

[Bajic]

Hello fellow Investors,



I am new in the real estate investing world and I just had a question to ask many of you seasoned and/or new investors out there.



What are some of the tools that you folks use to determine fair market rent for your income property? Without you overpricing or under pricing?



Sincerely Yours,



Newbie

 

[Alvaro Sanchez]

I recently went to that process of finding market rents for a property as I was not familiar with that part of the city.



I basically use:

- CMHC reports to get the minimum rents for that city.

- Real estate agents (to provide a list of rents for the street or postal code).

- Websites similar to http://www.padmapper.com where I can see what other people are asking.

- Contact my network of real estate investors who own property in that part of the city.

- Check other property management companies and check their inventory and rents.



I use all these to establish the base minimum rents for the property then I adjust (+) based on special features and amenities. If you use proper marketing and language in your ads, you will soon realize that for most client-tenants, you asking rent is just a small factor in the equation.

 

[Bajic]

Thank you!

 

[KevinWeiler]

Here is what I have been doing to determine fair market rents:


- Compare your property to other similar rental properties in the area. I use websites like craigslist, kijiji, padmapper.com, rentBC, etc. A quick google search will bring up lots of local rental ad websites in your area. Keep in mind that the asking price is just that ` the `asking` price. I find when owners are renting their properties themselves they are often overpriced usually due to the amount of emotion they tied up in the property


- For this reason I also check local Property Management websites and browse through their rental ads. PM companies know market rents and their listings are usually spot on with pricing.


- If you live in your target market I would recommend driving around and looking for `For Rent` signs and calling them to inquire about pricing. Maybe even go to a showing or two to get a feel for the type of properties that other people are offering


- This one I learned from another REIN member and is pretty solid. Post a `ghost ad` for your property or the type of property you intend on buying. I have done this several times and it works brilliantly. Borrow some MLS listing photo`s for the property you're intending on buying and write an ad as if you are planning on renting it that month. Determine if you are over/under priced by the amount of interest you`re getting. The general rule of thumb that I use to determine if I am priced correctly is the amount of showing requests that I receive. If a property is priced correctly you should be receiving at a minimum 4 ` 5 showing requests per week. You might get a dozen or more emails per week but if its priced correctly you need at least 4 -5 people requesting for a showing per week. Generally speaking people don't waste their time seeing properties that they know/feel is overpriced.

 

[RossNeufeld]

Best thing you can do is know your area. Above are all great (although time consuming) ways to learn local/specific area rent prices/rates. Planning is key, and the Ghost ads are great for trying to determine interest in that specific area for the type/size of property before a purchase, but it can take up to a few weeks to get the responses you need, and sometimes that is too long of wait if your trying to close a deal. Do this and all the other checks to make yourself the "expert" of said specific area. Then when you see that 3+1 bed, 2 bath with a double detached garage you know before even calling your realtor what that house will rent for. Then you can proceed with your goldmine scorecard (or whatever check list method you use) to determine if that property will be a good investment to take you to the level in which you desire.



Just my 2 cents...



Good Luck with the investing!

 

[Bajic]

Awesome thank you very much for the tips!