Are you looking to invest in rental homes? Whether you want to invest in Airbnb property or a traditional rental, one crucial thing that you need to determine to maximize your return on investment is how much to charge for rent.
If you have other aspects of how to rent a house at your fingertips but get this wrong, you may still not be able to turn a profit. The most effective way to determine the optimal rental price is to run a rental market analysis (analyze rental comps). You have probably heard of comparative market analysis. Well, this is quite similar but focuses on active rental listings.
In this article, we are going to discuss how to find rental comps for both traditional and Airbnb investments. So keep reading.
What Are Rental Comps and Why Are They Important to Real Estate Investors?
Rental comps, or rental comparables, are basically rentals properties that are very similar to your property or the one you are looking to purchase and are located in the same area. By knowing how much landlords or Airbnb hosts of similar properties are charging in the area, you’ll be able to set a fair market rent that is neither too high nor too low.
For instance, if you are buying an apartment, you can get a fairly good rent estimate by finding around 5 comparable properties of similar size and number of rooms, and determining the average apartment rent.
Without a rental market analysis, determining the optimal rental rate can be very challenging. The last thing you want to do is to set the highest possible rent that comes to your mind. This will only repel potential tenants and leave your property unoccupied. Therefore, you’ll lose out on monthly rental income and have negative cash flow.
On the other hand, you also don’t want to charge rent that is way below the rental comp level. While your rental properties will always be occupied, you will be leaving a lot of money on the table. This, too, is likely to lead to negative cash flow and a low return on investment. Moreover, you are likely to attract mostly low-quality tenants who cause more problems to landlords.
Rental comparables help you find the pricing sweet spot. This a rental rate that is competitive enough to attract good tenants and also maximize rental income. Therefore, it’s important that you know how to get rental comps.
How to Get Rental Comparables
The first step to finding rental comps is to determine what features to look for. For you to get an accurate rental estimate, the comps should be very similar to the rental property you are analyzing.
Consider property features such as:
- Neighborhood
- Property type
- Number of bedrooms
- Number of bathrooms
- Square footage
- Number of floors
- Year of construction
- Amenities like balcony, swimming pool, and others
- General condition
- HOA presence
- Furnishings
Once you know what to look for, you can begin searching for rental comps. There are many ways to find rental comps, both online and offline. Here are some common traditional options:
- Hiring a leasing agent
- Talking to property management companies in the area
- Talking to landlords or Airbnb hosts in the area
- Using rental websites like Craigslist, Zillow, and Airbnb
When it comes to finding rental comps, you have many options. However, for a rental property investor, many of these traditional methods have major drawbacks. First, manually gathering rental data can take you weeks.
You also need to enter this data into a real estate investment analysis spreadsheet, which is time-intensive and prone to error. If you are wondering what the best way to find rental comps for real estate rentals in the US housing market is, the answer is Mashvisor.
How to Find Rental Comps Using Mashvisor
With Mashvisor’s rental property calculator, you can access and analyze traditional and Airbnb rental comps in a matter of minutes regardless of your experience in real estate. First, you need to find an income property that is within your budget and matches your investment requirements in terms of property type, cash flow, rental income, cash on cash return, preferred rental strategy (Airbnb vs traditional renting), and others.
Whether the property is on the real estate software platform or you enter the address of an off market property, you can easily access comparable rental properties. When you click on the Rental Comps and Analysis tab, you’ll see a list of comparable Airbnb listings and traditional listings.
All the traditional and Airbnb data provided by Mashvisor is highly accurate as it’s gathered from a number of different reliable sources such as the MLS, Zillow, and Airbnb (for Airbnb comps).
If you are looking to rent out the property as a traditional rental, you should focus on the traditional listings. For each of these similar rental properties, the investment property calculator provides real estate data such as:
Rental Comps for Traditional Investment Properties on the Mashvisor Platform
- Monthly rate
- Address
- Number of bedrooms
- Number of bathrooms
- Distance from the property you are analyzing
- Percentage of similarity to the property you are analyzing
On the other hand, if you want to invest in short-term rentals, focus on the Airbnb listings. For each Airbnb rental comp, you will be able to access the following Airbnb data:
Rental Comps for Airbnb Investment Properties on the Mashvisor Platform
- Airbnb daily rate
- Monthly Airbnb rental income
- Address
- Percentage of similarity to the property you are analyzing
- Distance from the property you are analyzing
- Airbnb occupancy rate
- Rating and Airbnb reviews
One amazing feature of this rental property calculator is that it allows you to download the list of rental comps as a CSV file. Therefore, you can easily access them whenever you want and share them with real estate experts in your network to get more insight from them.
Apart from providing rental comps quickly and efficiently, another feature that separates Mashvisor’s rent calculator from other calculators in the market is that you can get a comprehensive rental property analysis for any investment property listed on the platform. You can also analyze off market properties after entering their addresses. You’ll be able to access the rental data such as:
- Rental income
- Rental expenses (one-time start-up costs and monthly expenses)
- Cash flow
- Cash on cash return
- Cap rate
- Occupancy rate
- Optimal rental strategy
The Bottom Line
Unlike in the past, starting a rental property business is easier for everyone regardless of his/her experience due to the ease of obtaining reliable real estate data. If you want to determine how much to charge for rent, you can quickly access accurate Airbnb and traditional rental comps using Mashvisor’s rental property calculator. Mashvisor is the ultimate real estate investment software for investors as it offers more than just rental comparables.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.