If you’re a new investor or a wholesaler eager to dive deep into the real estate market, you’re in the right place.
You might be wondering, what exactly are rental comps?
Think of them as the pulse of the rental market. They provide a snapshot of what similar properties in a particular area are renting for, allowing you to price your properties effectively, forecast potential rental income, and evaluate the feasibility of your deals.
In this guide, we’ll unveil the mysteries behind:
1. The Single Best Way to Find Comps Easily and Quickly: Zillow is not just for casual browsing anymore. And, spoiler alert: property managers are the unsung heroes in this space.
2. Other Methods: Because it’s always good to have a Plan B… and maybe a Plan C.
3. How to Find Rental Deals Off Market: Get ahead of the competition and find those hidden gems before anyone else.
Whether you’re a wholesaler trying to comp a deal or a buy-and-hold investor looking to add another property to your portfolio, knowing how to accurately run rental comps is a critical skill. Each state has its quirks, from varying timelines for foreclosures to differing regulations, but the principles remain the same.
So, kick back, grab your favorite cup of coffee, and let’s embark on this journey together. By the end, you’ll be comping properties like a seasoned pro.
Single Best Way to Find Comps Quickly
Ah, rental comps. The lifeblood of any savvy real estate investor or wholesaler. They’re like the breadcrumbs that lead you through the forest of the rental market. But how do you get your hands on these elusive comps? Well, let’s dive in.
MLS – If You Have Access
First up, we have the MLS (Multiple Listing Service). The good ol’ MLS is like the private club of the real estate world. If you’ve got access to it, you’re in a great spot. Brokers and agents use the MLS to list properties, but it also doubles as an invaluable comping tool. The listings here are up-to-date, precise, and the gold standard for market data.
But there’s a catch. Not everyone can waltz into this club. Typically, it’s reserved for licensed real estate professionals. However, if you can forge a solid relationship with an agent or broker, they might be kind enough to pull some comps for you.
Free Listings
Alright, not everyone has a golden ticket to the MLS. So, what’s next?
1. Apartments.com:
This isn’t just for apartment hunting. The platform has become a reliable tool for investors. By searching for units in your target area, you can get a good feel for what renters are currently paying, especially in larger multi-family buildings.
2. Zillow:
The behemoth of online real estate. Most people think of Zillow as a place to gawk at dream homes, but it’s also a hub for rental data. The ‘Rent Zestimate’ feature gives you an approximate rental value of any property. Plus, with a multitude of listings, you can gauge the going rates for different types of homes in various neighborhoods.
Both of these platforms have their strengths. If you’re looking to understand the broader market trends and get a quick snapshot, they’re your go-to tools. But remember, like all things in life, they aren’t perfect. Always cross-reference your findings with other sources.
Other unusual methods to finding comps
In the ever-evolving world of real estate, sometimes the beaten path is a tad too… well, beaten.
Sure, using online listings and the MLS are standard routes to finding rental comps, but for those who like to think outside the box, there are some unconventional methods that might just give you an edge in your property pursuits.
Calling Property Managers
When’s the last time you picked up the phone to get information? In this digital age, it seems almost archaic. But guess what? It’s a gold mine. Property managers have their fingers on the pulse of the rental market. After all, their job revolves around knowing the worth of a property in real-time.
Here’s a simple script to get you started:
> “Hi [Manager’s Name], my name’s [Your Name] and I’m considering making an offer on a property in [Area/Neighborhood]. Before I take the leap, I was hoping to get some insights from a pro like you. Could you share what you think the potential rental income for a property like that would be?”
Remember, it’s not just about the figures they give. The nuances in their response, their hesitations, or enthusiasm, can give you valuable insights into the rental market’s dynamics.
Talking to Other Investors
You know who knows real estate? People who invest in real estate. Groundbreaking, right? If you aren’t already a part of a Real Estate Investment (REI) club, now’s the time to jump in. These clubs are teeming with seasoned investors, novices, and everyone in between.
The beauty of talking to other investors is the depth of knowledge they can provide. They’ve been in your shoes, they’ve faced your challenges, and they’ve reaped the rewards of their hard work. A simple conversation over coffee can yield more insights than hours of online research.
Plus, these discussions aren’t just about numbers. They’re about experiences, strategies, failures, and successes. You’ll learn about trends, shifts in the market, and maybe even some juicy insider information that hasn’t hit the mainstream channels yet.
Using Software to run rental comps
Here’s a quick video on using a software:
How to Run Rental Comps: Crafting Your Masterpiece
Let’s paint a picture: Real estate, in many ways, is an art. And running rental comps? Well, that’s the detailed brushwork that transforms a canvas into a masterpiece. Every artist has their technique, their flair. Similarly, when you’re analyzing the rental market, you need to perfect your approach, so you capture the essence of a property’s value. It’s more than just data; it’s about capturing the nuances.
Size Matters
Like the vast expanse of a landscape painting versus the intimacy of a portrait, the size of a property is a foundational element of its value. Always compare properties of similar square footage. A 1,000 sq.ft apartment won’t rent for the same price as a 2,500 sq.ft home, even if they’re right next door to each other.
The Vibe of the Neighborhood
This is where your artistic intuition comes in. Two neighborhoods might be just a mile apart, but they could feel worlds away in terms of their ambiance. Maybe it’s the mature trees lining the streets, the quaint cafes around the corner, or the neighborhood kids playing in the parks. It’s not just about the ZIP code; it’s about the intangible “feel” of the place. That sense of community (or lack thereof) plays into the rental price.
Current Mortgage Payments
Consider this as the shadowing in your painting. Knowing the average mortgage payment in an area can give depth to your understanding of the rental market. If most folks have high mortgage payments, they’re likely expecting higher rents to cover those costs. On the flip side, an area with lower average mortgages might indicate more flexibility in rental prices.
Bedroom Count – The Finer Details
Imagine trying to appreciate a painting from a distance without getting up close to see the intricate details. The number of bedrooms in a property is like those finer strokes on the canvas. It’s a crucial detail that significantly influences the rental price. Always ensure you’re comparing your potential rental to other properties with a similar bedroom count. After all, a cozy two-bedroom condo and a sprawling four-bedroom house serve different needs.
Running rental comps is as much an exercise in understanding human behavior as it is about crunching numbers. Remember, every property tells a story, and it’s your job to interpret it. As with any art, practice makes perfect. So, the more comps you run, the better you become at discerning the real value behind each listing.
How to find your own rentals off-market
Let’s take a small detour from our journey of running comps. Imagine this: You’re in a marketplace buzzing with activity, and everyone’s clamoring for the same apple. Instead of joining the fray, wouldn’t it be better to find your own apple tree?
This is what off-market deals are about. They’re those hidden orchards that haven’t been picked over by every investor on the block. And as a savvy investor (or soon to be!), it’s wise to consider this path.
Why? Let’s dive in.
Why go off-market for your rentals
Creating a Buffer: With off-market deals, there’s breathing room. You’re not competing against a horde of other investors, which means you’re not pressured into making hasty decisions or overpaying.
The Art of Buying at a Discount: The beauty of going off-market is the potential for snagging a deal at a price below its market value. No middle-men, no bidding wars, just you and the seller hashing out a deal that makes both parties grin.
Crafting Creative Deals: The real estate canvas is vast, and off-market lets you paint with a broader brush. Without the confines of traditional market structures, you have the flexibility to structure deals that might be unconventional but incredibly lucrative.
Methods to Discover Your Own Deals
Lead Generation: Think of this as the treasure map guiding you to those off-market gems. It’s about identifying potential sellers before they even think of listing their properties. And how do you do this?
Direct Mail Campaign: Good old-fashioned mail. Send postcards or letters to homeowners in your target area. Your message should be clear: “I’m interested in buying your property.” It’s a numbers game, but when you hit the jackpot, it pays off.
NOTE: check out our sister company, Ballpoint Marketing... they provide great-looking (real) handwritten mailers that generate the best response for investors.
Here’s a video on using direct mail for finding deals:
Cold Calling: Ah, the thrill of the chase. Acquire a list of potential sellers (through public records, for instance) and get dialing. A tip? Be genuine, be patient, and be ready for a lot of nos before you get a yes.
Following Up and Making Offers: Finding a potential off-market deal is half the battle. Now, you need to nurture that lead. Regular follow-ups are key. And when the time is right? Make your offer. Remember, in the off-market world, negotiation is your best friend. So, sharpen those skills and get ready to haggle.
NOTE: at Call Porter, we have a “fractional lead management” service were we have trained US based individuals following up for you. They won’t make offers, but they’ll least rekindle the fire and book appointments on your calender. Just book a call with our strategy reps and ask about it.
In this bustling real estate marketplace, sometimes the quietest corners hold the most promise. So, while running comps and understanding the market are essential, never underestimate the power of digging a little deeper, going off the beaten path, and finding those hidden deals just waiting for a discerning investor like you.
