One of the things I want to provide in my package when offering a wholesale deal is the local rental rates so buy-and-hold rehabbers can have an idea of how much to charge after they fix the property up.
I’ve searched the archives here and I’ve also looked elsewhere, but I can’t seem to find a good source that can give a good reflection of rental rates in a particular area. I’ve already asked my realtor contact for this information, but she hasn’t replied yet.
How do y’all get rental rates for an area that you’re about to buy in? Any suggestions?
I’m not sure how accurate this is, but I believe I read here that a rough idea is to use 1 to 1.3% of your purchase price as a guideline. This seems a little out of whack when you get into higher priced properties, but makes sense on the lower end.
i.e.–A $50,000 house rents for between $500 and $650/month.
If I’m off base I’m sure someone will be along shortly to correct me.
Open up your local paper and use the internet classifieds in your area (craiglist.com, rent.com, etc.) and see what rental investors are renting them for.
Lots of good suggestions here, the best of which is the newspaper and online services (which have interior photos and provide good descriptions) and property management companies. Not good would be any percentage of purchase price, especially in the recent markets. You may find that in the same market area where two properties have sold in the same price range, the rental values have a huge disparity. Age, condition, curb appeal, W/D in unit, air conditioning, parking, amenities, etc. all play a part in the rental value.
Another thing to consider is Section 8. Although it is changing as HUD is getting short on money, it is not uncommon to find that relatively identical properties also vary greatly in rental rates because the Section 8 rents are higher.
