Are you overlooking the importance of rental comps when evaluating potential investment properties?
I know that many would-be investors, especially wholesalers and fix and flippers might be thinking that taking the time to evaluate rental data is a waste of time. “After all, I’m only interested in rehabbing and flipping this house. I have no interest in holding onto the property for any length of time.”
Unfortunately, this is where we see too many investors, especially newbies, run into trouble and put their financial futures at risk. In a best case scenario, you’ve done all your research, you know the ARV, you’ve completed all the necessary repairs, completely rehabbed the property and now it’s time to put the property back on the market. Miraculously, it sells in one day!
But in some cases a property can simply become a dead-weight deal with a negative cash flow every month. In the worst case, one could end up losing some or all of their investment.
Fortunately, this is something which can easily be avoided by considering renting as an alternative exit option if your first plan doesn’t work out. Renting out your investment property is a great way to enter the real estate investing world. But many people have no idea how to go about determining whether or not a specific property would be a profitable rental or not.
Here at The Equity Finders, we feel that this is something you should definitely know before purchasing any investment property.
Obviously, you want to look at many of the same factors for rentals as sales comps, such as living area square footage, number of bedrooms, bathrooms, property condition, pools, parking spaces, and of course, location.
There are a lot of online tools for pulling rough rental comps including, Trulia, Hotpads, Craigslist, Zillow and Rentometer. But in many cases, the prices can be inaccurate due to overpriced rental listings no one is willing to pay. These tools also do not take into consideration the types of renovations done or the number of days on the market.
For example, if a comparable property across the street from yours is asking $1,300 a month and it has been on the market 90 days, it’s a pretty good indication that the market is not willing to pay that. There can be a huge difference between asking rents and actual rents. In short, one house might be asking $1,300 a month, while an identical unit next door could have just leased for $1,000 a month. The market will always let you know whether or not something is too high or what the area will command.
It’s hard to know online because the data isn’t provided like actual recorded sales comps. Obviously, the best way to know what your property can rent for, is by knowing the actual rents being charged for like properties in the area by using actual rental comps.
Having the ability to access and evaluate accurate rental comps and data is vital for all investors. And this is exactly what our Smart Map ARV and Rental Comping System provides!
Don’t chance getting stuck with a dead-weight deal and a negative cash flow by failing to do your due diligence on rents and rental demand. Smart Map Systems is provided as a free service to our clients.
Visit: http://TheEquityFinders.com to learn more today!
For other great articles and information regarding rental investments, please visit: https://azreia.org
by Laura Leatherdale