Introduction: Get the Most Out of Your Real Estate Investment
If you are a new property owner, the first question that pops into your head is, “How much should I charge for rent?” This is an important question and has a huge impact on your financial success as a landlord. If you undercharge, you lose money each month, but you also will diminish the value of your property. Overcharge and the property will sit vacant for an extended period with no money coming in, and bad things tend to happen to vacant properties. So, picking the right rental price is like the children's fable The Three Little Bears, where you want to pick the rent price that is “just right.”
There are a few online websites that will assist you in determining the rental price that is “just right” for your property. By leveraging tools like Zillow Rent Estimator and Redfin Rent Estimate, you can stay competitive in the market and attract quality tenants.
The Power of Rent Estimates
Rent estimates, also known as rent comps, help you determine the fair market rent for your property. By using tools like the Zillow Rent Estimator and Redfin Rent Estimate, you can:
- Assess the rental market in your area.
- Determine your property's earning potential.
- Make informed decisions about lease renewals.
- Stay competitive and attract quality tenants.
Zillow Rent Estimate vs. Redfin Rent Estimate
While both Zillow and Redfin rent estimates provide valuable insights, they may differ slightly due to their unique algorithms and data sources. Comparing these two tools will give you a well-rounded understanding of your property's earning potential.
Zillow Rent Estimator
- Takes into account the home's physical attributes, local rental rates, and public data
- Offers a free Rent Zestimate® tool.
- Provides access to Zillow Rental Manager for advertising on Zillow, Trulia, and HotPads
Redfin Rent Estimate
- Utilizes a proprietary algorithm that considers property details, location, and local market trends.
- Offers an estimate range to provide a more comprehensive view of potential rental income
- Integrates with the Redfin platform for property listings.
An alternative to Zillow and Redfin
Zillow is by far the largest real estate site, but there are many other online tools that can help you to discover the rental price for your property. For example, my company, Del Val Realty & Property Management has a tool for landlords to determine the rental price at https://www.delvalproperty.com/philadelphia-property-management.
Similar to Zillow you go to our website and enter the address. Then, provide some basic information like numbers of beds, bathrooms, square footage, and if it is single or multi-family. From that input, you get a much more detailed six or seven-page Rental Property Analysis Report, showing the estimated rental price but many other important facts as well. These additional items include a list of the actual “similar” properties it used as comps and charts showing the five-year trend in pricing and time to rent properties.
Lease Renewals: Timing and Strategy
Rent estimates can also help you make informed decisions about lease renewals. Here are some tips:
- Monitor the market: Keep an eye on local rent trends and make adjustments accordingly. Rents in the US have been up over 20% in the last 2 years so it is important you keep up with local rents.
- Timing: Schedule lease renewals during periods of high demand to minimize vacancies
- Incentives: Offer incentives to encourage tenants to renew their lease, such as minor upgrades or discounts on rent
Making the Most of Rent Estimates: A Real-Life Example
Let's dive into a specific example to see how rent estimates can help maximize rental income.
I selected a property we manage to illustrate how these different rental pricing sites would work in the real world. Here are the results:
Zillow - Zillow has the Rental Zestimate at $2,447.
Del Val Website - Our website determined a rental price of $2,571.
Redfin - Redfin gave us a price range of $2,379 to $2,599.
If we take these three sites they average to $2,535 per month.
Conclusion: We just rented this property within the last thirty days for $2,595. This is a single-family home with lots of other homes in the area that are similar, but these rental pricing sites did an outstanding job of predicting the true market for rent.
More than Just Numbers: Additional Factors to Consider
While rent estimates are a valuable tool, it is essential to consider other factors when determining your property's earning potential:
- Local rent control laws
- Property taxes and insurance premiums
- Homeowners’ association fees
- Property maintenance expenses
Conclusion: Leverage Rent Estimates for a Thriving Investment
Real estate investors can greatly benefit from rent estimates to make informed decisions and maximize their rental income. By leveraging tools like Zillow Rent Estimator, Redfin Rent Estimate and even our site, you can stay competitive in the market and attract quality tenants. Remember to monitor market trends, adjust rent prices as needed, and consider additional factors like local rent control laws and property expenses.
Investing in real estate requires knowledge, strategy, and adaptability. With the right tools and resources, you can make the most of your investment and ensure a thriving rental business.
Expert Insight: Mike Lautensack on Rental Property Management
Mike Lautensack is the owner of Del Val Realty & Property Management, where they manage close to 5000 rental units in and around Philadelphia. Mike emphasizes the importance of staying informed about the local rental market, regularly adjusting rent prices, and offering incentives to attract and retain quality tenants.
Ready to dive deeper into rental property management and explore more resources? Visit Del Val Realty & Property Management for expert insights, comprehensive services, and support tailored to your unique needs as a real estate investor.