Also, If you have any questions, please don't hestitate to contact Tyler and his team!
You’re Not The Only One
It’s not uncommon to be a property investor and be ‘unsure’ of what market rent is. Honestly, market rents can change as quickly as our housing market changes. I’ll let you process how crazy that could be….
When deciding how much to charge for rent, most investors are trying to weight out two (painfully obvious) concerns:
- What is the most rent that I can get out of this property each month to maximize my cash flow?
- What amount of rent will keep my property occupied with a good tenant that won’t leave for a ‘better deal’.
Yea, there are many other questions going through an investors mind. The main obstacle though is finding a happy medium between maximizing cash flow but also keeping the property rented out to a good tenant.
Where Can You Go?
Believe it or not, there are a lot of resources online where you can do your ’shopping’ for comparable rents. I’ve found one in specific I’ll recommend:
Rent-O-Meter - This is a website designed to collect information while you’re searching for information. It’s been a great resource for myself and other investors I work with. I’ve also found it to be extremely point on in my market (I can’t say anything for others.. because I don’t rent outside of my market).
You’ll need the following information to get the comparable rents:
- Property Address
- Property City & State or Zip Code
- Current Monthly Rent (What You’re Charging/Thinking of Charging)
- How Many Bedrooms?
- Units in Building (In case it’s an apartment complex)
From there, you’ll get your results.
What Do You Get?
- You’ll get a map of the rental properties being used to give you a comparable rent schedule.
- You’ll see a scale of the rents. Low-Medium-High. The needle represents where you lie in that scale.
Here are examples:
There Are Other Choices
Although I’ve come to really like Rent-O-Meter, I’ve also found success with other techniques. Here are a few other favorites:
- Calling other property management companies in the neighborhood.
- Looking on Craigslist.org to see what else is for rent and what they’re looking to rent places out for.
- Newspaper advertisements.
- Contacting local Realtors that have experience with investment real estate (I can connect you to someone on this one).
- Contacting appraisers in town that may have experience inspecting investment properties (they have to do a comparable rent schedule on an investment property appraisal).
- Join a local property investor association and ask around.
Make Educated Decisions
It’s not always easy to be an investor. However, with the right people and resources - it can be a pretty fun business to be a part of. Me and my team are always available for questions and if you need connected with someone, we can always help with that too!
As long as you take the time to examine what’s taking place in your local market, you’ll be able to make smart decisions and really avoid the ‘riskiness’ of real estate investment. At this point, hopefully it will be a simple calculated risk and you can move forward!
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Tyler Osby
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;)
I've been in this industry for many years as a loan officer, property manager, investor and landlord. As someone that is excited about real estate I often get in conversations with people about rentals and long term real estate investments. I've been asked so many crazy questions even from people in the industry. For example:
(Ans. Rent is dictated by the market not your bills.)
(Ans. No, my ability to pay the mortgage is not influenced by the value of the home. Plus, real estate is best as a long term investment so I don't care about a couple bad years.)
(Ans. This is my favorite. I even read a news article that was answering the same question and they also wrongly concluded stocks are better. Anyone that thinks this really misses the biggest advantage of real estate, leverage. For example, If I have $10K. I can buy a $100K house or $10K of stocks. Right from the start I have a bigger asset with real estate and that $100K house will appreciate faster at 10% than the $10K of stocks will at 15%. Plus, if you want to take money out of the house you can borrow against it and you don't loose the asset. Try taking money out of your stocks without loosing the asset. You can't because the asset is the money.)
(Ans. I'm never sure how to answer this. Is there risk? Yes. In my opinion there's not much risk because I understand it. Plus, what is the alternative? Do nothing? If you always avoid risk you're not ever going to do anything.
(Ans. Not too much, I do have to be prepared for such a thing and proper screening does reduce that risk. Plus, how much damage can one person do? Even if they did a lot and the bill was $5-10K, I make more appreciation than that in one year. So as long as I'm able to afford it then it is still a great investment.
Real Estate is not complicated. To be successful with real estate you don't have to find the perfect deal. You don't need to order books and tapes from infomercials and you don't need a complicated spreadsheet to determine if a property is a good investment. If you want to be a successful real estate investor you only need to understand this one big secret: remember what homes used to cost? Now they cost more. That's it. People will always be saying that and in the long run it will always be true. Other than that, get some good professionals on your side to take care of the details.
People always look back and say things like, "I should have bought back then", "I wish I had just done it", "that property is worth so much more now", "imagine if we'd bought a couple houses back then." But they didn't buy because they wanted a better deal or they were unsure of the real estate market or they wanted to save up more money, etc. Here is a valuable tip: When it comes to real estate waiting to buy is never a good financial move because then appreciation is working against you instead of for you.
So to anyone thinking about getting involved in real estate I say join in and buy, buy, buy. You will learn a lot and you'll be much more successful and wealthy.
Jeff Stinson
Property Manager
www.stonebridgerealestate.net