As a rental property owner, knowing the rental comps near me can help me charge the right rent to my tenants. But how do you find this data?
Table of Contents
- 3 Common Challenges of Investing in a Rental Property
- Is It Better to Invest in Your Local Real Estate Market?
- What Are Rental Comps & Why Are They Important?
- Steps to Finding Rental Comps Near Me
- Things to Consider When Studying Rental Comps Near Me
- Subscribe to Mashvisor to Find Rental Comps
One of the most important metrics that can help you gauge an investment property’s potential profitability is rental comps. Using rental comps can help you compare several rental properties of similar features within or near the same area. Often, landlords use rental comps to determine the ideal rent to charge their tenants. However, many investors also use rental comps to know the potential rental income of a property.
Before deciding to buy a rental home, many investors go online to search for “rental comps near me.” However, doing a general online search cannot really provide specific and accurate results. The best way to find accurate rental comps near you is to use a reliable real estate analytics platform, such as Mashvisor.
In this article, you will learn that:
- Rental properties can be lucrative when you do your research properly before buying one.
- Rental property investing comes with several risks and challenges that investors need to understand.
- Investors have the option to invest within their areas or out of state—both of which have their own pros and cons.
- Understanding the rental comps near the property before buying a rental investment is crucial if you want to ensure profitability.
- Mashvisor is one of the best platforms that can help find accurate and up-to-date rental comps data.
3 Common Challenges of Investing in a Rental Property
Owning a rental property investment is an excellent way to earn money; however, it also comes with many challenges. Before deciding to buy a property for either traditional or Airbnb rental, you should first know the risks involved. After all, knowing what you are signing up for can help you prepare for any possible hardships that you will likely face in your investment journey.
Here are the potential challenges in rental property investing that investors should be aware of:
1. Finding the Right Property
The most important step in making a successful real estate investment is to find the most suitable rental property. However, it is also one of the most challenging steps. For many investors, finding the right investment property can be difficult. It becomes harder if they don’t know where and what to look for.
To make sure that you’re investing in a profitable income property, you should first determine the best location that’s optimal for your preferred real estate strategy. Then, you can start searching for properties near or within your chosen area. You should also perform a rental analysis, find rental comps near the location, and determine the potential income the property can generate.
For most investors, the above process can be quite laborious. As a solution, many new and seasoned investors rely on various real estate platforms to access for-sale listings. When choosing a platform to work with, find one that can provide other valuable resources—like real estate data, neighborhood comps, and analytics.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo now.
2. Finding Quality Tenants
Low occupancy rates are one of the biggest challenges many rental property investors face. To ensure that your property gets a good occupancy rate, you need to prepare your rental home so it can attract tenants. Take good pictures for online marketing, and make sure that your property is ready for viewing.
However, making sure that your property gets occupied is just one thing. Finding the right tenants who can surely pay the rent on time and use the property with proper care is a different story. Many landlords find it difficult to look for quality tenants. In fact, most landlords have experienced having to deal with bad tenants at some point in their rental business.
Ending up with bad tenants can become a major headache, so it’s important to screen your tenants carefully. You should also draft a contract based on the local landlord-tenant laws in your city. Include consequences and penalties in the contract in case the tenant doesn’t pay the rent on time or the property is damaged due to the tenant’s poor behavior or negligence.
Related: How to Deal With Bad Tenants?
3. Paying for Maintenance and Other Expenses
A rental property can be a costly investment. It involved a variety of expenses, including mortgage, insurance, utilities, taxes, repairs and maintenance, and other fees. It means you must be financially ready if you invest in rental properties. Also, the most important thing is you need to charge the right rent to earn an income that’s more than enough to cover the costs.
The best way to make sure that you’re charging the right rent price is to study the rental comps near the property. Several factors can affect the rental comps data, such as the neighborhood, size, property type, number of bedrooms and bathrooms, and more. When looking for rental comps, you should compare your property to those with the same features as yours.
Is It Better to Invest in Your Local Real Estate Market?
One of the benefits of real estate investing is that you are not limited to your local real estate market. As long as you’re willing to comply with all the licensing requirements that may vary from one state to another, you can invest in any market you like. But which is better—to invest near the location where you are based or to explore other locations?
Advantages and Disadvantages of Investing in Your Area
Depending on which state you live in, buying a rental property in your local real estate market can be beneficial. Still, it’s not always the wisest decision for real estate investors. You need to consider a number of factors, such as the availability of inventory, demand for rentals, and the local economy.
On the other hand, if I am investing in my local rental market, it would be easier to find rental comps near me. It allows me to stay updated with the market and make informed decisions.
Advantages of Investing in Your Area
- Building rapport with tenants: It’s easier to build rapport with your tenants when you can visit them in person from time to time. Plus, it’s also more possible to screen prospective renters yourself and ensure you only accept quality tenants.
- Easy management: Since you just live near your rental property, managing it will be easier. You can visit your property anytime to do maintenance checks and to directly address your tenants’ concerns.
- Less travel expenses: If you invest out of state, you need to prepare for additional travel expenses when you do property visits. But if you invest near where you live, you can cut down on travel costs.
Disadvantages of Investing in Your Area
- Limited opportunities: Since you only limit your choices to the location near you, your opportunities will also be limited to what’s available near your location. It means limited inventory, limited demand for rentals, and limited types of tenants.
- Difficult to find a property for your rental strategy: Since inventory is limited, finding the best income property for your chosen strategy can be challenging. Sometimes, investors need to adjust their plans depending on what’s available.
- Dependent on the local economy: Unless your home location is really progressive, investing in your local market can be risky. It is because your success will be dependent on its local economy. It means you’ll be greatly affected if the economy fails.
Advantages and Disadvantages of Investing Out of State
The good news is you always have the option to explore other locations. Many investors find investing out of state more beneficial, especially when they see better opportunities. Typically, investing out of state can be a good idea if your local market doesn’t have enough opportunities for rental property investments.
However, investing in other locations that are not near your home city can also be challenging. It’s important to understand the pros and cons before deciding where to invest.
Advantages of Investing Out of State
- More opportunities: Investing out of state provides more opportunities and options for investors. You can choose a location with a strong economy, fast job growth, and high demand for rentals. You won’t be limited by what’s available in the area because you can always choose another location.
- Promotes diversification to minimize risk: If you keep multiple investment properties in your portfolio, investing in different states can help minimize risk. Also, your success as a real estate investor won’t be fully dependent on your local economy.
- Tax benefits: Some states are more tax-friendly than others. It is one of the reasons why many investors choose to buy a rental property out of state. It allows them to choose a location where they can benefit the most when it comes to taxes.
Disadvantages of Investing Out of State
- Difficult to manage: As you don’t live near the rental property, you won’t be able to manage your investment personally. You’ll need to hire a property manager to do maintenance checks, deal with the tenants’ concerns, and perform other day-to-day operations.
- Additional cost: Hiring a property manager is another expense you need to factor into your budget. Also, if you prefer to see your property regularly, you may need to book regular property visits. If the property is not located near you, you’ll need to spend more on travel expenses.
- Unfamiliar with local laws: Since rental rules and regulations vary from state to state and from one city to another, you first need to understand these laws thoroughly. It’s also important to note that in some markets, real estate laws are more in favor of the tenants.
It’s important to understand the pros and cons of both investing locally and in another state. Wherever you choose to invest, make sure to study the competition thoroughly. Gather the necessary rental data and analyze the rental comps near your property before making any decision. Search for “rental comps near me” to help you choose the best rental property.
Related: Should I Look for Rental Properties Near Me or Out-of-State?
What Are Rental Comps & Why Are They Important?
Rentals comps, or rental comparables, are a type of real estate tool used by investors and real estate professionals to compare similar rental properties within or near the same location. Analyzing rental comps is like doing a comparative market analysis. It is done to determine the potential income a subject property can generate.
With rental comps, you are comparing rental properties with similar features that are located near each other. Landlords who already own a rental property use rental comps to help them determine the right rent estimate in the market. Knowing the rental comps near their property allows them to charge the correct rent to tenants.
On the other hand, if you’re just planning to invest in rentals, studying the rental comps near your chosen property is essential to help you determine whether that property can be profitable. Your decision will be based on actual figures, which include the actual income generated by actual rental properties of the same features near your chosen area or neighborhood.
Steps to Finding Rental Comps Near Me
There are various ways to find rental comps, but the easiest one is by going online. However, before you start searching for “rental comps near me” from your computer or mobile phone, make sure to be guided by the step-by-step process below:
Step 1: Decide on a Location
The first step is to decide where you want to invest. If you choose to invest within or near your local real estate market, you must decide on the specific neighborhood. Make sure to study the local neighborhood’s market first to determine the demand in that specific area. When choosing a neighborhood, you should ensure that it is generally safe for tenants and visitors.
Step 2: Find a Prospective Rental Property Investment
Search for a property within or near your chosen neighborhood. You can contact your local real estate agent or do an online search to find a potential investment property. You can easily do this through Mashvisor’s investment property search feature. Our database contains hundreds of thousands of available listings anywhere in the United States.
Step 3: Determine the Property’s Important Features
To find accurate results for your rental comps, the comparable properties should have similar features as the subject property. They include the size of the property, property type (apartment, single-family, multi-unit), number of bedrooms, and number of bathrooms. In some cases, amenities like parking, appliances, and the age of the property are also considered.
Step 4: Search for “Rental Comps Near Me” Online
After you’ve determined the necessary features, you can start searching online using the phrase “rental comps near me.” There are several websites that provide limited free rental comps searches. However, to ensure that you’re getting quality comparables, it’s best to subscribe to a trusted real estate analytics platform like Mashvisor.
Step 5: Study, Analyze, and Compare the Data
Rental comps are meant to be studied and analyzed to help you determine whether or not the property you’re looking to buy is worth your time and money. The best rental comps should include all the important information about the properties, including the property value, rental income, expected expenses, and cash flows.
Fortunately, Mashvisor provides all of the above data in a comprehensive presentation. After you search for a property, you can click on the item that you like, and it will lead you to its real estate data. There, you can find the rental comps near the property, which include all the important information mentioned above.
Plus, you can also use its rental income calculator to determine how much income you can possibly earn based on the information that you input. You can customize your financing option and expenses to get a more personalized result.
Related: Rental Income Property Calculator: What Is It and Where to Find One
Things to Consider When Studying Rental Comps Near Me
The quality of your rental comps is important to ensure that you’re getting the right data that can help you make an accurate analysis.
The following should be considered when finding the best rental comps:
- Location: Rental comps should be located within or near the same area or neighborhood. The more specific the location, the better.
- Features: Rental comps should have similar features to the subject property being compared. The property size, type, number of bedrooms and bathrooms, and other amenities should be considered.
- Upgrades or improvements: Rental comps should also consider the age of the properties and whether there are recent upgrades or improvements done. It can significantly affect the value of the property, as well as the possible rent to charge.
Subscribe to Mashvisor to Find Rental Comps
Finding rental comps near your investment property is a crucial process that can help set you up for success. To find the most profitable rental property, you should consider several factors, including the local economy, demand for rentals, and potential rental income. The best way to find this information is through a thorough analysis of rental comps.
But before you start searching for “rental comps near me,” understand that not all data you can find online are accurate and reliable. So, it’s best to only put your confidence in a trusted platform. The best real estate platform does not only offer access to a for-sale database but also provides all the necessary information to make an informed investment decision.
Mashvisor is a one-stop shop that can help you find the best rental property investment through its wide selection of listings across the US. In addition, it provides all the essential data you need, including the property’s cap rate, cash on cash return, expected income and expenses, and occupancy rate.
With Mashvisor, you can quickly see the rental comps near your chosen property based on the important features mentioned above. It also shows how similar the comparable listings are to your chosen property by showing a similarity score that’s expressed as a percentage. In such a way, you will know what you are comparing with.
Get first-hand experience on how Mashvisor works. Sign up for a 7-day free trial now, followed by 15% off for life.