For Landlords - how do you determine "market rent"?

[Dude]

Hi all,
I'm a relatively inexperienced landlord and could really use some help. I'm trying to learn how to best determine the "market rent" of my property. It is a single family home, 800 sq ft heated, 2 bedroom/1 bathroom/carport on a good size lot (75' x 127') in a nice location/neighborhood in west Saint Petersburg, Florida (5 min from Gulf beaches). We currently live 1 block away from this rental property, and we bought the rental property with the intention of building a new home for our family on the lot within the next 5-10 years, so this isn't a pure investment property and I have no hope of covering the 10 year mortgage payment plus taxes/insurance with rent, all I can expect is to get what the market will pay. But, we'd like to pay off the rental property mortgage before we bulldoze the house to the ground!

So, my question to you landlords is, what sources/data do you look at in determining the "market rent" to ask for your property? Do you look at the newspaper classified ads, call around to other rentals in the vicinity, query the Multiple Listing Service, look at HUD data, etc.? What source do you place most importance on?

Thanks for any tips you can provide. Last Sunday's classified ads suggest that $875/mo may be about right, but I'm wondering if I should look at other sources? Any advice appreciated.

 

[Nords]

Craigslist, if your area has an active one, or some other local online equivalent.

If you're near a military base, browse their off-base housing website to see what others are offering.

Some realtors & property managers will offer you a free property assessment as part of their pitch to manage it for you. Of course they'll make it look pretty rosy, but if you can acquire their checklist or some other documentation then you can work up your own (more realistic) estimate.

 

[Dude]

Thanks for the tips, I'll check them out.

 

[P.S.]

Craigslost, local paper.

If it gets rented right away, your price was good. If no one rents it, you're asking too much.

Think about where you want to advertise for tenants too. We have the benefit of being within walking distance to an institution with tons of researchers and post docs, i.e. people who spend all their time in a lab, read: people who tend to do less livin' in your property.

 

[free4now]

craigslist for sure.

 

[Martha]

You might want to look at a few houses for rent in the same area and do your own comparables.

 

[SecondCor521]

What PS said.

If you're really enthusiastic, pretend you're a renter and then pick a $800 rental, an $850 rental, a $900 rental, etc. Go visit them and ask yourself objectively which one you'd rather live in: the one you own or the one your visiting. If you find yourself saying they're about equal, then that's what rent you can likely get.

2Cor521

 

[Dude]

If it gets rented right away, your price was good. If no one rents it, you're asking too much.

Just curious.....what time frame do you consider "right away", i.e how long do you advertise at one rent price before lowering to get a renter in there? Thanks.

 

[Dude]

Thanks to everyone, I've printed this thread for future reference

 

[P.S.]

Just curious.....what time frame do you consider "right away", i.e how long do you advertise at one rent price before lowering to get a renter in there? Thanks.

Depends on a number of factors, mainly your market and your tolerance of how little or how much income you want.

Before the times of easy/ sub prime lending, I usually rented it out within the weekend of placing an ad. I think this was mainly due to location and condition of the property and don't think I was underpricing initially. Once the renter is moved in and pays on time, I increased rents just to keep pace with inflation, even if rent prices moved up markedly (it is a hassle to find a renter).

During the housing boom, took about 1 mo to clean up between tenants and find a good renter.

Now, post-easy money, I've found it harder to find good tenants from a far distance. Read: phishing people wanting to rent with weird payment options.

In your situation, I would make sure your rental is real nice and pretty. Since you live 1 block away, you have the luxury of convenience, and can meet everybody who is interested. Then if you like the tenant, you can be "open" to negotiations. If you price it too low and attract a not as desirable potential tenant, then you would be hard pressed not to rent to them if they have the money ( which you would have to do to avoid a discrimination suit).
B/c it's not just rent money that you want, but minimal damage to your property which = less work for you down the line.

OTOH, if you are going to plow the property into the ground anyways, then maybe a tenant helping the process wouldn't be too bad.

 

[Dude]

Thanks for sharing your experience, much appreciated!

 

[FANOFJESUS]

Market rent

My father had rental homes for many years and he always kept the rent a little under the market rate. He said the people stayed longer and in the end he made just as much with less trouble because he had less turn over.