Using Rentometer for Deal Analysis
Real estate is a roller coaster of emotions. At times, I feel like I know exactly what I'm doing, and other times I feel the opposite. In many larger cities and markets, it is very competitive. I currently live in Santa Cruz, CA, but invest out-of-state 3000 miles away in Philadelphia, PA. We are continually going up against big players in the industry, and smaller players who cover the city in signs that say, "sell my house in Philadelphia." This means we need to make sure that our offers are competitive, consistent, and accurate. A huge fac-tor when analyzing properties and determining our offer price is estimating the rental rate. Is comping rents a perfect science? I think not.
When I first started investing, finding Rentometer was a game-changer. I would initially estimate potential rents by scanning Craigslist, which is still the wild wild west even in 2020. It's slow, not user friendly, and half of the postings and listings on it are scammers. Craigslist is the opposite of 'accurate data.' Once I grew out of that phase, I began using other resources like Zillow and Redfin. You can get by with these tools, but it will take you much, much longer to run rental comps.
Rentometer is in another league compared to the previous re-sources mentioned. Reason one is probably because Rentometer's number one purpose and function is to provide estimated rental amounts for property and area. That is their number one job. Craigslist, Zillow, and Redfin are great at their number one function, which does not compare and estimate rents.
Why Is Data So Powerful?
As I mentioned earlier, analyzing deals can be very difficult. Sometimes it will be super quick and 'cookie-cutter,' and other times, it will take three times as long as usual, and you still won't feel confident about your analysis. The more data you have, the better chance you have of making accurate estimations. Rentometer is not only quick, which will help save hours down the road if you are comping deals consistently, but it is also accurate. It pulls nearby rents from other rental property and compares properties that are similar to your subject property.
If anyone else invests in large cities as I do, they are probably aware that many neighborhoods are street by street when it comes to property values. For cases like this, it is crucial to have as much data as possible to support your case. For multi-family investors, rents come into play even more since they are a significant factor for appraisers when determining property value. If you are getting your property refinanced, having higher rents and showing the property's income will help in the appraiser's eyes. Using tools like Rentometer will help review accurate rent estimations before offering and buying properties.
Additionally, if you get into a property expecting higher rents that are not realistic, you may have trouble making a positive return each month. Use the tools that are out there, like Rentometer, to your advantage. Also, don't hesitate to reach out to other local investors. It can take years to know a market inside and out. Leverage the people around you, add value where you can, and people will add value back to you and help. Many investors that have been in the game a while were around way before any fancy tech tools existed. Real estate is a team sport! Don't be afraid to ask for help.
This blog post was contributed by Alex Capozzolo of Brotherly Love Real Estate
About the Author: Alex Capozzolo is the owner of the Brotherly Love Real Estate blog and a content writer for the real estate industry. We buy houses in Philadelphia. Our focus is on helping people through one of the most important investment decisions of their lifetime by seamlessly providing fast, honest, and professional real estate services.