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Range
There is a range of potential rent for every property, from top of the market
to below market. Knowing the range is especially helpful in determining 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. There is a rule of thumb 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. Tenants understand that prices
go up every year.
Price-Points
These are listings at or near the same price. In Real Rent Comps, if
the rent is within $5 of each other, they are considered to be effectively the
same. This makes it easy to indicate 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. When these levels
are detected, they are highlighted yellow. When multiple price points are
seen within the same graph, they are alternately highlighted yellow and white to
differentiate the levels.
Remove
Takes the listing out of consideration for your current analysis, but
keeps the listing available for future searches. This is useful when it is believed
that a listing may hurt rather than help your analysis.
Images
Photographs and attention grabbing icons associated with the listing.
For photographs, click on the "Photos" list to pop-up pictures associated with
the listing.
FYI:
a) 12% of ads have photos
b) 10% of ads have attention getting icons.
Description
This is the advertisement as it originally appeared in the newspaper.
Phone
There are two aspects to this:
A) Sorting
Sorting by phone number is helpful to determine
multiple listings by the same landlord/agent, which is interesting to know if a
few individuals have a big presence in the area of interest. It can also help to point
out agent listings (many times, listings that have a agent will not denote their
advertisements with "AGENT"). When listings are sorted by phone number this
information comes to light.
B) Filtering
This filter was established to allow users to see the effect of not listing a
phone number in the ad. A very small number of landlords will force
potential tenants to drive by the property in order to get the phone number for
the landlord. The philosophy is that doing so will generate higher caliber
questions and, more importantly, concentrate the phone calls to potential
tenants who have seen the property and are really interested. When
advertising a property for rent, the phone may be constantly ringing and the
same few questions will be asked over and over again. This gets a bit
tiresome for the landlord and can interfere with day-jobs. Given that the
number of landlords doing this is incredibly small, I doubt that this filter
should be used to gather comp information. It is provided to give a
measure of insight of how long it might take to rent a house when employing this
method, without the risk of going through this yourself.
FYI:
a) 1% do not list a phone number
b) 50% of listings are posted by Agents
List Date
The date that the property was initially listed for rent.
DOM
Days on market. That is, the number of days that the property has been
advertised for rent. Note that when the Days on Market is over 30 days,
Real Rent Comps will mark the DOM entry red to indicate a potential problem. Many properties will generally be listed for 1 to 3 weeks. If
a property is still listed for rent after 30 days, the listing should probably
not be considered as a comp (unless this is normal for the area). Usually
when a listing takes a long time to close, the following is at fault:
1) The rent is too high for the area (see how it compares with other active and
completed listings)
2) The renovation is not up to par (not clean, functional, up to the standards
of the neighborhood, grass not mowed, debris in yard, etc.)
3) Poor salesmanship (not answering the phone, missing sign in the yard, unable
to let potential tenants see the property - which includes not having pictures
available, language barriers, poor personal appearance/demeanor, not making
potential tenant feel welcome, etc.)
4) Not finding the "right" tenant (which is a factor of one or more of the
above)
5) Extenuating circumstances (any matters beyond immediate control, such as offensive neighbors, graffiti on a nearby house, loose/noisy
animals, etc.)
Rent
This is the advertised rent price for the property. This is different
from the "effective 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/month
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.
Flag
Removes a listing from the site. Doing this should be done with caution
as it will affect other users. If the listing has something wrong with it,
users are given the opportunity to let Real Rent Comps know.
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.
Mean
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 does provide calculations
using the mean since it is not as useful as the median value when dealing with
data distributions.
Average Completed DOM
This is the median of the Completed Listings' Days on Market values.
This should give an approximation of how many days that it takes to find a
renter. Steps can be taken to rent a property in fewer days (for example,
offering a lower rent). The value is used as a benchmark for the Effective Rent calculation, as it is carried forward to the Expected DOM
field.
Your List Price
This is the rent price at which you're intending to offer for your property.
Expected DOM
This is the Days on Market value as derived from the median of the Completed
Listings.
Effective Rent Calculation
When advertising a unit for lease, landlords may be asked
by potential tenants if the advertised rent "is the best that they can do".
That is, they're trying to get a lower rent price than the advertised amount. There are times when
the rent should be lowered. Here are some examples:
1) When they can move in before the typical Days on Market period expires (the
form for the Effective Rent Calculator will help you to determine the minimum
that you should be willing to accept)
2) If you find the "right" tenant (if their application comes back stellar, then
reduced rent will likely offset costs by selecting the "wrong" tenant)
Once you have an idea of what the rent should be from the rent comp report, then
enter this along with the Days On Market average from the Completed Listings.
This will give you the Effective Rent that you would have received after a
typical lease-up period. This is also the minimum that should be accepted
if they can move in immediately.
Subdivision
This field is used to filter by the submarket. 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), zip code, then area (e.g. Alief, Katy, etc.).
It is recommended to use both the Subdivision and Intersection field types in
the same search.
Intersection
There are two fields: one for each major street located near the property.
Some listings do not use the Subdivision in the advertisement, and use
Intersection instead. If there are variations in which the streets may be
displayed, enter all variations in the field for the same search.
Square Feet (including "+ or
-")
This is the size of the home. In
other words, this is livable space (garage space is not included). The
exact size of the home is not something that tenants generally focus upon; approximately 10% of tenants will ask about this
and about 15% of listings
contain square footage information. That both of these numbers are low is
no coincidence. Tenants typically gauge the size of the home in a more
subjective way (e.g. two homes of the same square footage may feel different due
to an open floor-plan in one, different layouts, paint colors, etc.). Using
a calculation such as price per square foot to extrapolate the rent only serves
as a quick and dirty way to
get a rough approximation about how to price the property, but this is
generally not a method likewise employed by tenants. Listings that
advertise the square footage of the home will be removed from the results if
they fall outside of the zone specified in the Search. Given that only a
handful of listings display the size, listings that do not specify the square footage will be
reported in the results. By having the size filter not remove the listings
which do not mention size, we're not limiting our analysis to only 15% of the
data.
Year Built (including "+ or -")
This is the range in age of properties 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, since about 2% of the ads include this information.
Type
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.
Amenities
These are features of the property that makes it more attractive to tenants.
Think of it as what makes the property special.
Pools
Pools are generally seen as a liability for rental property, as a
source for a potential lawsuit and as a maintenance issue.
Nonetheless, if the equity is high enough during the purchase, many
landlords will buy properties with pools and they can serve as a great
renting point in the summer months. There are three options for
Pools in the form. Private means that it is on the premises and
Area means that it is in the community center. FYI: 1% of ads
mention a private pool.
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 rent comps do not differentiate whether the comparable properties accept Section 8 tenants.
FYI:
a) 2% of ads do not want smokers
b) 5% of ads do not want pets
c) 6% of ads offer lease/purchase
Section 8
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. Approximately 10% of ads actively seek out Section 8 tenants.
Type Face
Newspapers charge to make the printed characters stand out, as can be seen
with bold face, italicized lettering, etc. Real Rent Comps allows for an
unbiased way to test whether this makes any difference. Run a Search with
these features and one without and see whether the median rent or DOM changes.
FYI:
a) 40% of ads use bold face
b) 2% of ads use italicized lettering
c) 10% of ads use a header
Months
advertised
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. Real
Rent Comps also provides the ability to select a Custom Date Range, which allows
users to examine how the rental market changes throughout the year (in the
summer when school is out, when tax refunds are received, during the holidays,
etc.). This is a powerful tool that can be employed to pinpoint the best
time of the year to schedule lease renewals.
Tips
1) When accessing pages, the browser might display a banner showing
that content has been blocked. This is simply caused by elements
of the website written to enhance customer experience, such as the site's
ability to create a new window to display Help content and the context
sensitive Help screen. If the
browser isn't instructed to unblock the content, you will still see all
of the data provided by Real Rent Comps, but clicking on the Help icons
will navigate away from the current page into the Help area.
2) The "Account 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.
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