This week the question for Ask Landlord Hank is about how to determine competitive rent in a Class C building. Remember Landlord Hank is not an attorney and is not giving legal advice.
Dear Landlord Hank:
I’m having trouble determining a competitive rent for my vacant three-bedroom in Kenmore. We are a class C building with remodeled upgrades, but no amenities such as an exercise center. – Larry
Dear Landlord Larry,
Let me tell you how I find market rent, as a Realtor, and how I used to do so as a private landlord.
The first data base I check is MLS. I look in the subject property subdivision or if large condo building, I’ll check that, for properties that are actively advertised and that have rented in the last six months.
I want to find a similar unit, so in your case, I’d be searching for a three bedroom with the same number of bathrooms, same square footage, give or take 300 square feet either way, with similar finishes.
First I look at what has actually rented, and if I find a few like the subject property, I’ll be very close to market rent. Then I look at what is advertised but not rented yet. I look at the rate, then how long this equal property has been on the market.
It may be priced too high if it is just sitting there. If the rate is equal to similar properties that have rented or is just a little higher, then I know I have found the market rate for my property.
If there are very few properties to rent in my development or subdivision, I’ll check back to see what has rented in the last year. If not enough are available, I’ll check to see what has rented in the last two years. If I still don’t have good comps, I’ll go outside the subdivision and choose similar properties within one mile; again, if I don’t find enough good comps, I’ll check properties within two miles.
Hopefully, you’ll be able to find adequate comps looking within two miles of the subject property and going back two years.
As a private investor, I used to check what was available in my property area on Craigslist and Facebook marketplace, and I also used to drive the neighborhood and see what my competition looked like.
I’d check the units for rent, terms (first, last and security up front?), what was included in the rent, the unit finishes, state of the property (well cared for?) and the neighborhood.
I was always able to determine my market rent from these sources.
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