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This field is used to filter by the neighborhood. Be as specific as possible but note that the results will be grabbed from the actual listing. Suggestions for this (going from most specific to least specific): subdivision name (leave out the section number), major cross streets, zip code, area (e.g. Alief, Katy, etc.).
Single Family Houses (freestanding/detached) and n-plex (duplex, quad-plex, etc.) can be selected for comparables. Other types of properties, such as townhomes/condos, apartments, manufactured homes, rooms, and vacation rentals are being planned for a future release of this site.
Primary Factors
The property's square footage and the year that it was built are
among the core components classically employed by real estate agents and
landlords to indicate rental value since they are quantifiable and are factors
with all real estate. While these factors do give an initial impression of
what to expect at the property, at the same time the advertisements typically
will not display these values, as it has been shown that prospective tenants
"feel" this when they see the property. If the property feels fresher due
to new paint and carpet, or feels larger due to the floor-plan, then this will
often suffice. In other words computing price per square foot is a method
used to give a rough idea about where the property should be priced, but this is
not a method likewise employed by tenants.
+ or - sqft
This is the range in square footage that will be considered. Listings that advertise the square footage of the home will be removed from the results if they fall outside of this zone. Listings that do not specify the square footage will be reported in the results.
This is the range in age that will be considered. Listings that advertise the age of the home will be removed from the results if they fall outside of this zone. Listings that do not specify the age will be reported in the results.
Displays the closed listings within the specified number of months. This is important to factor in "the velocity of the market". The rental market changes over time as conditions change (i.e. interest rate, natural disasters, unemployment rate, etc.). It is generally assumed that the market is essentially the same as it was in the previous 6 months.
These are features of the property that makes it more attractive to tenants.
Think of it as what makes the property special.
Accepted tenant
The criteria for tenants allowed to occupy the property will also
influence the rent price as well as the days spent in marketing the property.
For example, it is logical to assume that not allowing pets on the property will
increase the days on market since the tenant selection will be made from a
smaller pool. Another example is that the rent will be higher for a Lease
to Own property. When agents and appraisers pull comps on a property, they
may either apply "rules of thumb" with regard to the market differences with
different types of leases, or just ignore these factors altogether. For
example the MLS comps do not differentiate whether the comparable properties all
accepted Section 8 tenants.
Government subsidized tenants. Landlord opinions about this vary from "preferred type of tenant" to "I'll never accept them again". Proponents tend to focus upon the facts that the government is more reliable in paying and the tenants stay longer. Others focus on the facts the tenant will not maintain the property in the same manner as non-Section 8 tenants, and the landlord is essentially unable to realize any money from them if they are sued for damages.
Days on market. That is, the number of days that the property has been advertised for rent.
The date that the property was initially listed for rent.
Eff. Rent
Effective rent. This value takes into consideration lost
rent due to the days on market. For example, consider two landlords who
have similar properties for rent. Landlord A requested $1000 per month for
rent and has it rented in 1 week. Landlord B requests $1100 per month for
rent but it took 6 weeks to get a renter for it. Which landlord is
actually better off? The effective rent can tell you this. Here is
the math for Landlord A:
Lost rent due to DOM (for the year) = $1000/month x (12months/year) /
(365days/year) x 7DOM = $230.14/year
Effective rent = $1000/month - ($230.14/year / 12 months) = $980.82
By the way, the effective rent for Landlord B is $973.42. As can be seen, the effective rent is a useful tool for determining whether it is better to hold out for higher rent, or to accept a lower amount in order to get a higher overall return.
| There is a range of potential rent for every property, from top of the market to below market; the more comps that are returned, the better idea of where the top of this range is located. Five comps is typically enough to feel comfortable with the data. | |
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Pricing the property at the top of the market isn't the goal per se. The goal should be to offer the "best product at the best price". In other words, establish your property as a clear-cut winner amongst the other available rental properties. Several strategies can be taken to accomplish this. For example, you can match the rent price of the competition (the active listings) if you have better quality. Or if the quality of your home and the competition is about the same, then be slightly cheaper priced than your competition. You don't need to severely undercut your profits to make this happen; $10 or so less than your competitors is enough. Do not be tempted to charge more if your property is in better condition than the other available properties. This creates an ambiguous choice for renters. They are left somewhat perplexed as to whether your nicer property is worth the extra price. If you frequently experience potential renters liking the property when they see it for the first time, but they never return the application, this may indicate this ambiguous condition. Charging over the market rent also creates a "scum-bagnet" (scum-bag magnet). Here's why: While the more desirable tenants are applying for the clear-cut best choice properties, or are deliberating whether to move into yours, the less desirable tenants, people with a violent criminal history, evictions on their record, etc., will be applying for any decent property that will take them. They're doing this because they have a more difficult time finding places to live. |
| Making sure that the active listings are in line with what actually closed is also key. Check the medians for both active and complete to confirm this. | |
Average (specifically the Median)
The median is the rent price that lies midway between the lowest and highest rent prices. The median is less affected by potentially extreme values in the range of rent prices, so it is considered to be more accurate than the mean. All averages in Real Rent Comps are expressed as medians.
The mean is calculated by adding together all the values, and then dividing this by the number of values. This is what most people "mean" when they talk about averages (it is commonly used because it is easy to compute). As long as the data is symmetrically distributed (that is, if when you plot them you get a nice symmetrical shape) it is OK to use - but it can yield incorrect results by a few extreme values, and if the data is not symmetrical (ie. skewed) it can be downright misleading. Real Rent Comps has chosen not to provide the mean since it is not as useful as the median value when dealing with all types of data.
The data are also analyzed to determine whether several rent prices are within $5 of each other. When this happens, this indicates that there is a well established level of rent for a certain type of home. This is good to know in order to place your rent price at or perhaps just below that level. If you're seeing multiple levels, this certainly doesn't indicate a problem. Many times landlords will try to get the best possible tenant by offering a lower price level than the going rate (which causes more prospective tenants to view and apply for the property, allowing the landlord to select the best one). This will be seen as multiple levels in the rent price.
This is a measure of the variance from the mean of the various rental values that were returned. The smaller the standard deviation, the closer that the listings are to the mean. Real Rent Comps has decided to post this information for those who may desire it, however our advice is to focus solely upon the median value to get an understanding of the "average" (which has inherent safeguards against problems surrounding data variance).
This is a measure of the distribution of errors (or random fluctuations) in estimating the population mean. Again, just stick with the median and you'll be OK.
Average price of the comps divided by the average square feet of the comps multiplied by the square feet of the subject property (the subject property is the property in which you're interested). This is a commonly used method to extrapolate the rent. It is the opinion of Real Rent Comps that the concept of the calculated rental value should provide a rough approximation of the target rent, and shouldn't be considered to be the way in which a rent price is chosen.
This is the Real Rent Comps algorithm of choice with regards to attracting a new tenant. It is based upon the median price of the competition, a "teaser rate" to generate the most attention, and it leverages psychological thresholds (for example, paying $3.99 9/10 for gasoline, instead of them just saying $4.00).
Use this range to determine whether to bump up the rent near renewal time. The completed listings should be considered to be the accepted rent range, however check with the active listings to be sure that the market hasn't turned against you. It is recommended to keep the rent increase below $20 per month, else the tenant might not renew. It is also better to increase the rent by a little each year rather than make a sharp adjustment. Making modest upward adjustments will allow the tenant to budget for the increase. Don't be fooled into thinking that an excessive rent increase will still be cheaper for them than moving. Many will move purely upon the principal of the matter. Tenant turnover is several times more expensive than the amount returned by rental increases so keep the adjustments low and show them that your costs have also increased. They will understand that prices do go up every year.
The "Go to Profile" link, also seen when initially registering for this service, contains the option to receive information from Real Rent Comps. This will contain useful tips on renting that extends the scope of the site. For example how to get coupons for Home Depot, where to find the best priced fixtures, techniques for handling problems with tenants, etc.
FAQs
Q1) Are price per square foot calculations done on this site?
A1) No, price per square foot calculations are a quick and dirty way to determine value.
This is something that real estate agents and some landlords have had to resort to in order
to get a ballpark estimate of what the property should be worth. Real Rent Comps provides
an accurate means to determine value by combining the same factors that
tenants use to evaluate properties along with a tremendous volume of listings.