You can get a significant amount of information about where rents are heading, how long properties stay on the market, what areas are renting the best, and what kinds of things are attracting applicants.
First of all, what do you hope to accomplish by taking a rent survey? Obviously the first thing is to find out where your rents are in relation to the market. But there’s more. You can get a significant amount of information about where rents are heading, how long properties stay on the market, what areas are renting the best, and what kinds of things are attracting applicants.
All of that information can help you get your property rented more quickly and for the highest amount of money.
Doing a rent survey is easy, but can be time consuming. Doing it properly could require several weeks, unless you save newspapers.
Create a spreadsheet to calculate the data you are going to get. If you have a computer spreadsheet, it’s easy enough to create it there. If you don’t have a computer, either buy a 14-column accounting pad at a stationery store, or use a piece of note book paper to create columns.
Now create a column for each of the following: Phone number, Address, 1 Bedroom, 2 Bedrooms, 3 Bedrooms, 4 Bedrooms, Square feet, rent per square foot.
Get out the Sunday rentals section of the classified ads for the past three or four weeks. You will only be checking the rents around the area of your rental property. Get a city map and mark off the areas that you are going to check. Survey only the properties in that area. You are not going to check any rents except those that are in neighborhoods comparable to yours.
You are also only checking properties of the same type as yours. If your property is a fourplex, you won’t compare that with single-family homes or apartments, the rents will be different. So, if your newspaper divides rentals into single-family, plexes and apartments, look at the appropriate section.
Go through each of the ads that is comparable to your property. If possible, use only the ads where there is an address in the ad. If you want to use properties with no address, you’ll have to call the landlord to get it.
There are two ways to accomplish the next step. You want to sort the ads by phone number. This is important, because you don’t want to list the same property twice. Since you have several weeks of newspapers, there’s a good chance of that happening unless you have some way to cull duplicates. The reason you sort by phone number is that the landlord can change the ad, but will not change the phone number.
But even the duplicates can provide useful information. You can see how they change the ad, how long it has been running, and if the rent is the same.
You can either cut out each of the ads and glue them to a three by five card, or write them on a three by five card. If you don’t put them on a card, you have no way of sorting them. If you are using a spreadsheet on a computer, simply create a column for the phone number, enter all the information, then have it sort by the phone number column.
If you are doing this manually, discard the duplicates, and enter all the information you have left in the spreadsheet. You won’t have the square-foot figures, but you can get them. Give the addresses to your friendly neighborhood Realtor, the one who mails you all the stuff or leaves it on your door. Tell him or her what you are doing and ask if he or she will look up the square foot figures in the county tax records. It only takes a few minutes and chances are he or she will be eager to do it.
Those figures will not be available for apartments, and may have to be approximated for plexes, but it’s a useful piece of information to have.
Once all the figures are entered, average the rents for the one-bedroom, two-bedroom, etc. units. You can also get a median figure (half above, half below). That accounts for high or low aberrations in rent amounts. A computer spreadsheet will do it for you instantly, if you tell it to. Manually, you will have to write each rent amount down in ascending order and see which amount is in the middle.
Now you have a figure you can compare to your rent. Is your rent high, low or right on?
Once you have all the information from the short version, you get on the phone. Call each landlord, tell him or her what you are doing and ask the following questions:
- 1. Is the property rented?
- 2. Did it rent for the advertised amount?
- 3. How long did it take to rent?
- 4. Square feet of the unit
- 5. Special features or services the landlord offered
- 6. Did you have to adjust the rent or make concessions to get it rented?
Now drive by your property, and then drive by each of the properties on your list and see how they compare to yours. Be objective. You won’t do yourself any favors by making yours seem better than the others in your mind. Judge on the following bases:
- 1. Condition of the property
- 2. Condition of the properties in the surrounding area
- 3. On a busy street or quiet street
That’s it. Now you have figures and a real data to determine what the rent for your property should be. Save the survey and do it again in six months. See where the rents are going in different areas or all over town. See how long properties are staying vacant. This information is money in the bank.
Robert Cain, publisher of the Rental Property Reporter, has been providing solutions for the rental property industry for seventeen years. He is author of the landlord manuals Profitable Tenant Selection, Can Section 8 Work for You?, Using the Gross Monthly Rent Multiplier, the tape series “Avoiding the Tenant from Hell,” and several other booklets and manuals for landlords and property managers. In addition, he writes and produces newsletters for other companies that serve the rental property industry. He is a highly sought-after speaker, seminar leader and consultant on property management and real estate topics.