Determining the Demand

I’ve heard it said before that you need to determine the demand for rental properties. How do you do this? Do you contact the Chamber and ask what the ratio of owners versus renters?

Yes…you can also call the local Realtor board and get the local “vacancy rate”…


It’s good you’re checking the vacancy rate in your area. I’ve found that vacancies are a product of bad management. You would be surprised how many places are vacant because the landlord doesn’t put an ad in the paper, or all the papers if needed.

So if you find there are vacant properties that doesn’t necessarily mean there aren’t vary many renters, it could also mean there are a lot of dumb landlords in the area.

Contact realtors who deal with rental properties.
Drive by your area and pay attention to “for rent signs”.

I’ll chime in with an example here: I live in a very desirable area that has few rentals. Mainly high end older SFH’s but has a few carriage houses, above garage apartments, and a little house here and there like mine that snuck in years ago that rent, and the rent is affordable, compared to the prices of the housing surrounding it. You get the safety and ability to live in a nice part of town cheaply-just have to be able to live in a 1 or 2 br.

There is a great place for rent down the street for me on a type of cul-de-sac that has been for rent for months. I walk past it every morning when walking the dog. I look in the RE classifieds every day in the local paper, free paper, and craigslist to see what’s happening in my city. I’ve never seen it advertised. It’s managed and being leased by a prop. mgmt. co.-I know because there is a sign in the yard.

The prop. mgmt. co. has the sign in the yard, which you can’t see unless you drive down to the end of the street to the house, which no one does. And most of the time, the sign has blown over, so even then you can’t see it unless you’re standing directly over it. The prop mgmt. co isn’t a large company in my city, so it’s not one a prospective tenant would probably think to call to see what they have available.

Can’t imagine why it hasn’t rented in the last 4 months! Nice job guys! That would be a good property for me to call about and take off the owner’s hands, since obviously no one wants to rent it. I’ll be doing them a favor. :wink:


Your example is very common. Where I invest there are lots of rentals. There are plenty of vacant duplexes, even vacant fourplexes. Four units just sitting vacant. Why, it’s because the landlord doesn’t know what they’re doing. When I put an ad in the local papers I get 3-4 calls a day in the winter and 15-20 calls a day during the other 3 seasons. There is no effort needed to rent places out, but many sit empty. The last place I bought the seller just left it vacant because she didn’t want to deal with anymore tenants, so her answer was to leave it vacant. dumb, but very common in my area.

I’ve tried hard to find an answer to why, but I can not.

I have a few SFH/condo/townhouse rentals that I manage myself. About two months prior to any current tenant’s end of lease I usually track, by phone number, similar rentals in at least 2 local newspapers for a few weeks to determine comparable rental rates and speed of rental. (if a rental ad appears day after day/week after week I assume it hasn’t rented; ads that stop I assume have rented).

This provides me a comparable basis for either upping the rent on the current tennant or establishing a new rent (higher/lower/same) for a new tenant. I try to set my rents very similar to rents on comparable prioperties that rent FAST.


I would only use local Realtors. The Realtor should know the area enough to fill you in on any particulars of an area. When I’m buying in an area I always check with some of my renters and they seem to always be very knowledgeable about the good and bad things about a certain area.

-Talk to your existing tenants, they are a great resource.
-If you use a Realtor then only use a local Realtor.
-Look at some properties and talk with the tenants in the properties.

Besides vacancy rate, there’s also absorption rate, which tells you how many months of inventory you have. It’s a way of knowing how fast it takes for units to get rented, which will let you know of the demand in particular areas.

In East and Central Austin, very hot areas, potential renters proactively call to ask if you are willing to rent your home. If they see people outside working on the house, they’ll come up to you. It’s very different from years back and definitely let’s homeowners know that they have a winner.