So you have a property, or several, that you want to rent? You want to cover your bills at least and make some money at best. How do you determine the right rate? If you don’t price it competitively, you can be left with empty units, week after month. Yet you don’t want to lower it to the point where you’ll fill vacancies but at the cost forfeiting attainable profits. AHRN.com has put together our favorite tools for determining the fair market value for your military market rental property.
Finding your property’s market rental value — the going rate to rent it – is mostly determined by comparing it to properties like yours in the area. There are several factors that go into measuring this. Doing your own comparative market analysis (CMA) is a great educational process. Here’s how to complete a basic CMA:
Base Your Search on Apple to Apple Items:
- Type of property – house, apartment, high-rise building, townhouse, gated community
- Within one mile of your home or less. This can vary greatly depending on how spread out or tightly built your town is. In New York, Boston, San Francisco, it can be a matter of a section of town. In more rural areas, or in cities like Houston and Los Angeles that are spread out, your comp zone could be a matter of double-digit miles.
- Number of bedrooms and baths
- Same or similar square footage
- Same age of home + updates like renovated kitchen, stainless steel appliances, etc.
- Unfurnished or furnished, and if the latter, high vs. low-end decor
- Type of parking (street vs. covered, security garage, number of spots, assigned or not)
- Whether pets are allowed, and the terms in the pet addendum to the lease (number/type of animals, weight of dogs, increased security deposit)
- Whether utilities are included and which ones
Once you have your parameters for researching comps, where do you go for information? Check out the below as if you were looking for an apartment just like yours. It’s advisable to keep some kind of spreadsheet for the information you find.
First, create a spreadsheet and enter data for similar properties and enter address, proximity to your property, rent, bed, bath, age, updated amenities, etc.
Drive the Area: In areas that are spread out, like farmhouses, mountain homes and the like, you can make a pleasant time of getting in the car and systematically driving around looking for properties like yours and calling the number on any For Rent signs you see. About 40% of the time, depending on the area, you may luck out and grab a stat sheet from one of those little plastic boxes, though often they can be empty.
Rent Comparison Help: You will likely want to set up a spreadsheet and gain other helpful stats from these sites.
AHRN.com – when you upgrade your listing to a Gold Listing, you get access to RentSmart data that provides you rent averages for your listing compared to same bed / bath in the same zip code as your property. Also, you can create custom searches with more of the exact data you are seeking – bed, bath, square footage, age, zip, community, etc. Save that search as your CMA search and come back to it often!
Rentometer.com -This simple site is a quick check, though very basic. Plug in your property address, the rent you want to charge and it instantly tells you where it is on the charts for the area. If you create a Pro account, you have access to more resources.
RentBits – Make use of the rental rate directory that keeps track of area averages going back 14 months.
CityData.com – A comprehensive clearing house for info on all aspects of a city (located in the USA), including rents.
US Inflation Calculator – And to keep on top of inflation and adjust your long-term holdings from year to year, an inflation calculator can keep you current.
If your property is unique or you’re just having a hard time finding things that are a match, you might talk to specialized groups like your local Real Estate Clubs, Landlord Associations, or the area Chamber of Commerce. You can find these and other resources via Google.
Rent Valuation Services: If you own several units, or want to look at analytics and data like MSA vacancy rates, strength indicators, rental price per square foot, and the like, it can be an option to pay for a service that determines rental rates, like RentRange.
Know the BAH in your area: The BAH (Basic Allowance for Housing) is the amount given to military families by the Department of Defense toward their housing expense. It includes the payment for rent, insurance and utilities based on where they are stationed plus their pay grade and dependency status.
Consider Unique Features: Once you gather a reasonable amount of comps on your spreadsheet to figure out your property’s market range, consider amenities or features that factors in when deciding to set your price a little higher or lower within that, such as:
- A gym, pool or event room in a complex
- Upgrades like new appliances, security systems, whether WiFi is included, if it’s a “smart” house
- Neighborhood safety
- Proximity to schools, nature, public transportation, and the town
- Views or lack thereof
- Variables like whether a rental with the same comps are in a dark basement vs. the top floor
- The condition of the units.
In the end, the market speaks. Towns change, the economy changes, and trends in what people want changes too. You can set the rent for what you need to cover expenses, or for what you would love to get, but if you get no bites, it tells you that it is set too high (or may need to be updated somehow). The final, defining factor is what the market will bear. Otherwise, it will most likely sit open, and that can add up quickly!
Meet Your Contributor:
Rochelle Joseph is a Writer and Image Consultant who has had experience marketing, renting and buying/selling her properties for over 20 years. She has written and edited for several publications, including the Boston Book Review, The Emerson Review, ZooBorns.com, WildLife Magazine, the Houston Zoo, The Wildlife Center of Texas, One Spirit Interfaith Seminary as well as AHRN.com. She currently writes at her great gifts blog at http://lookyhereu.blogspot.com and her animal blog at http://naturegirrrl.blogspot.com.