Rents are going up, up, up in many markets. If a landlord is not keeping an eye on rental prices, and raising rents annually, they could find themselves charging way less than true market rents.
Three of the best ways to find out what properties rent for today is to use:
www.RentOMeter.com — put in an address or zip code to find out what other homes in the area are charging for rent. The “meter” will tell you if your rents are too low or too high and where the “sweet spot” is!
www.Rentals.com — put in a zip code, then select houses to see what rent other properties in the same zip code are renting for.
www.Realtor.com — put in an address or zip code to see what other properties are renting for.
Following is an excellent article by Jack Miller about how to pick the right rental amount so you stay competitive but still attract the best tenants. This technique could also lead to finding motivated landlords who will give you a master lease!. This article is from Jack Miller’s Management Masters Course.
The mark of the true amateur landlord is a monthly rent that has been set by rule of thumb! How often have you heard that rents should be 1% of the value of the house? Yet how rarely do they fall into that range? How many times have you talked to someone with a chronic vacancy problem who has set his rents by rule of thumb, or worse yet, by HIS monthly mortgage payment amount? When you give it serious consideration, it just doesn’t make any sense at all that the rental market cares one way or the other how much you paid for your house or how much your payments are. What do you think the renters consider first? What would YOU consider first if you were looking for living quarters? Would you be concerned about how the rent you paid related to the cost of the property or would you be most interested in WHAT YOU GOT FOR THE AMOUNT YOU PAID IN TERMS OF AMENITIES?
That’s really pretty obvious when you give it a little thought, isn’t it? Renters are going to be just like any one else in a market anywhere. They’re going to want to get the most they can for their money. So to attract them to your house you’re going to have to be able to compete in your rental market. Can you see how this fits in with our emphasis on SELECTION of a house for which tenants would compete rather than vice versa? That’s one key to setting rents: how many other houses can compete-in your area with yours at the same price per month with the amenities you can offer. If you’ve taken care to select a neighborhood in which there are few rentals, your market position will begin to become non-competitive. But you won’t know this for certain unless you make a specific investigation into the rental market to find out for sure.
Here’s what you should do every so often. Take your Sunday paper and find all the houses that seem to be like yours. If you’ll familiarize yourself with the various areas of the city which the telephone prefixes pertain to, you’ll be able to isolate your neighborhoods easily. Next, list the mid-priced 3-bedroom houses and list about 20 of them on a file card by order of their telephone number, list the address, rent, amenities, size, deposit and neighborhood ranking (as you rank it).
Start calling the owners as if you were personally interested in . renting a home for yourself. Once you’ve gotten all the basic information, then begin to negotiate. Mention your four kids, your matching Great Danes, the fact that you’re single but sociable, the fact that you’ll need to work out the deposit. Ask if you can move in in a couple of weeks if you pay a small deposit. See if lawn care and utilities are included in the basic rent. What about a six month rental? What about a 5 year rental with an option to buy?
Once you’ve talked to 20 owners you’ll be an expert on rents in your area, believe me. No one else will be going to all that trouble. Now take your file cards and try to compare the results to your own houses to see where your rents are with respect to the market. If the owners you’ve interviewed are hard to deal with, then you know the market is pretty firm, and you’ll be able to command higher rents. On the other hand, if they seem worried and acquiescent then that’s a good indication that their rent levels are a little high. From this point, you’ll be able to set your own rents so that they’ll be attractive. Remember, with your discount contract, you’ll be offering less services, transferring them to the tenant. So you’re advertised rents will seem like real bargains to the market. You should have no trouble keeping full at top market rates.
This may seem like a lot of work, but it will be well paid if you use all the information you will have gleaned. In a hard market, being able to raise all your rents can bring you a virtual cornucopia of cash. In December of last year I raised rents in only 21 properties and increased my net cash flow by over $9,000 per year as a result of a tight market situation. By contrast, I had a friend in another area who was experiencing massive vacancies because he felt he was ENTITLED to raise rents because of inflation. He never bothered to research his market area to find out just where his rents should have been. He lost hundreds of dollars of cash flow because of this.
Another windfall profit which can be obtained from this survey is the name and number of every owner who is an AMATEUR landlord. When you analyze your figures, they’ll jump out at you. They’re the ones who are going by rules of thumb in setting rents. Eventually they’ll tire of the game and if your keep in touch you’ll have an opportunity to make an offer on their property. Last but not least, you’ll also know all those who are willing to negotiate an option. Here’s a great opportunity to move into a sandwich lease position or into an option at very low cost. Thar’s gold in them thar hills, for them who wants to go find it. Make sure you’re at the front of the pack.
