How do I determine fair rental rates?

[Redstar1324]

I have the only RV park in a small town.

I don't have a lot to compare it to.

I have not changed the rents since I took the place over.

How do I know when they are too high or low? Many of the tenants are having trouble paying rent.

[Gold River]

Hi,

    This is one resource:  www.rentometer.com

Put address in, number of bedrooms, an estimated rental rate and it will tell you the market!


                GR

[Redstar1324]

Wow thanks.

[victoryrealestate]

If there is nothing like it in your area, I doubt a website resource will accurately tell you RV park rental rates. I recommend that you contact a commercial real estate appraiser. You do not need to pay for a full appraisal, just have them complete a rental study for you. They have the experience and the resources to tell you what the market rent is in YOUR location. I am sure it will be well worth the small cost.

[Kelly luvs Bandit Signs]

 A "fair" is a place where you find cotton candy and corn dogs. Your tenants can't afford the rent, but I bet they can afford a 12-pack of Budlight and  a carton of cigarettes each Friday.

It's amazing how fast they prioritize expenses once they realize you could care less.

I hope this helps!

[Redstar1324]

Yes, I see what you're saying.

[Estrogen Hostage]

Way too little information to answer. You say small town. Does the town have jobs? Do they pay well?

What is the median income in your area and how much $$ do your tenants make? How much is your rent? Do you provide utilities? How many lots? What are property taxes? WHAT IS YOUR VACANCY RATE?

Myself, I would start raising rents a little at a time. Maybe $20/month and see what happens to the vacancy rate. You might consider going up $20/month once a year until the vacancy rate approaches 80-90% (assuming you are higher than that now). At the same time, work to improve the appearance of the property and show tenants that they are getting some value from the additional rent. In the long run, you should get rid of most of the bad tenants and make your park more desirable with a higher net income.

[victoryrealestate]

What is the median income in your area and how much $$ do your tenants make? How much is your rent?

Good point here. If you really are lacking comparables, you can work backwards into the rent. I am going to assume that your residents are making the low range of area wages/income. Do some research and find out the low end average annual income. Statistics show that total housing expenses should not exceed 30% of the monthly income. That will help you see how your rent compares. Mind you, if they are paying lot rent and a loan on the trailer you will have to factor in the average loan payment as part of the 30%.

[Redstar1324]

What is the median income in your area and how much $$ do your tenants make? How much is your rent?

Good point here. If you really are lacking comparables, you can work backwards into the rent. I am going to assume that your residents are making the low range of area wages/income. Do some research and find out the low end average annual income. Statistics show that total housing expenses should not exceed 30% of the monthly income. That will help you see how your rent compares. Mind you, if they are paying lot rent and a loan on the trailer you will have to factor in the average loan payment as part of the 30%.

How do I find out the average income for a particular town?

[WBSteve]

What is the median income in your area and how much $$ do your tenants make? How much is your rent?

Good point here. If you really are lacking comparables, you can work backwards into the rent. I am going to assume that your residents are making the low range of area wages/income. Do some research and find out the low end average annual income. Statistics show that total housing expenses should not exceed 30% of the monthly income. That will help you see how your rent compares. Mind you, if they are paying lot rent and a loan on the trailer you will have to factor in the average loan payment as part of the 30%.

How do I find out the average income for a particular town?

Hard to say for sure but something like http://www.city-data.com/ might give you something to go off of.

The general rule as I always heard it is that rent should be 30% of your gross income.

[javipa]

Way too little information to answer. You say small town. Does the town have jobs? Do they pay well?

What is the median income in your area and how much $$ do your tenants make? How much is your rent? Do you provide utilities? How many lots? What are property taxes? WHAT IS YOUR VACANCY RATE?

Myself, I would start raising rents a little at a time. Maybe $20/month and see what happens to the vacancy rate. You might consider going up $20/month once a year until the vacancy rate approaches 80-90% (assuming you are higher than that now). At the same time, work to improve the appearance of the property and show tenants that they are getting some value from the additional rent. In the long run, you should get rid of most of the bad tenants and make your park more desirable with a higher net income.

That's good advice.

One of the ways that "Moses" taught me, was to call on '4Rent' signs in my area. 

If there's not a lot of signs, this tells you something about the market.
If there's a LOT of signs, this tells you something else.

Never mind, finding out what the asking rents are when you call, and getting a good idea of the market. 

Better yet, make appointments to check out the vacant units, and see what the competition is doing first hand.  This doesn't have to be done more than once if we're investing in a new area.  After that, we get first hand feedback from move-outs, and response rates from our advertising.

I made the mistake of letting one landlord in Long Beach, CA know what I was doing, by showing up and asking about her rents, and I nearly had a gun drawn on me.  Not really.  But man she ushered me out so fast, I thought somebody farted.

Back at the ranch, our rental ads should be giving us good feedback on the market, assuming we're quoting rents.

For example, way back in 2000, the rents on one of my 3/2/2's in Garden Grove, CA had become too low.  I had rented it for over-retail four years earlier at $900/mo., but the rental market had skyrocketed since then ($150+ annually).

Before the house was vacant, I advertised what I thought was 'retail', or $1,200/mo.  My phone rang off the hook. 

So, I increased the asking rent by $150, and my traffic nose dived.  However, I still got the house leased up quickly, not realizing that I was still offering a perceived bargain.  Retail rents had risen above $1,500 at that point.

I was fine with a perceived bargain ...just not an actual 'steal.'

Meantime, it's also probably smart to ask prospects what they're seeing in the market.  They'll tell you.  I've had more than one prospect tell me that I was asking too much in rents.

FWIW

[Redstar1324]

Way too little information to answer. You say small town. Does the town have jobs? Do they pay well?

What is the median income in your area and how much $$ do your tenants make? How much is your rent? Do you provide utilities? How many lots? What are property taxes? WHAT IS YOUR VACANCY RATE?

Myself, I would start raising rents a little at a time. Maybe $20/month and see what happens to the vacancy rate. You might consider going up $20/month once a year until the vacancy rate approaches 80-90% (assuming you are higher than that now). At the same time, work to improve the appearance of the property and show tenants that they are getting some value from the additional rent. In the long run, you should get rid of most of the bad tenants and make your park more desirable with a higher net income.

That's good advice.

One of the ways that "Moses" taught me, was to call on '4Rent' signs in my area. 

If there's not a lot of signs, this tells you something about the market.
If there's a LOT of signs, this tells you something else.

Never mind, finding out what the asking rents are when you call, and getting a good idea of the market. 

Better yet, make appointments to check out the vacant units, and see what the competition is doing first hand.  This doesn't have to be done more than once if we're investing in a new area.  After that, we get first hand feedback from move-outs, and response rates from our advertising.

I made the mistake of letting one landlord in Long Beach, CA know what I was doing, by showing up and asking about her rents, and I nearly had a gun drawn on me.  Not really.  But man she ushered me out so fast, I thought somebody farted.

Back at the ranch, our rental ads should be giving us good feedback on the market, assuming we're quoting rents.

For example, way back in 2000, the rents on one of my 3/2/2's in Garden Grove, CA had become too low.  I had rented it for over-retail four years earlier at $900/mo., but the rental market had skyrocketed since then ($150+ annually).

Before the house was vacant, I advertised what I thought was 'retail', or $1,200/mo.  My phone rang off the hook. 

So, I increased the asking rent by $150, and my traffic nose dived.  However, I still got the house leased up quickly, not realizing that I was still offering a perceived bargain.  Retail rents had risen above $1,500 at that point.

I was fine with a perceived bargain ...just not an actual 'steal.'

Meantime, it's also probably smart to ask prospects what they're seeing in the market.  They'll tell you.  I've had more than one prospect tell me that I was asking too much in rents.

FWIW

Sometimes, I can figure out Einstein's theory of relativity, and sometimes, the most basic of things confuses me...

If there are a lot of rental signs, it means what?

And if there's not a lot, what does it mean?

I'll take a stab at it... if there are a lot of rental signs, it means that there is low demand for housing and the rents are low, and if there are no rental signs, it means that everything is rented up and the demand is high.

Is this correct?

[javipa]

Yup.  Exactly.

[Redstar1324]

Yup.  Exactly.

How would you assess the economic health of Zellwood, FL?

Or how would think that I should do this? What statistics should I look at?

The median income for a family is $34,468 and there is a population of 2,817.

It is about 20 miles outside of Orlando.

[ShaunMartin]

I use craigslist and zillow and i talk to property managers to determine rental rates. After this once you post a rental its pretty quick to gauge if you have posted to low or to high by the responses and interest you receive on the properties.


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