Rental Comps: What Are They and Where Can I Find Them?

What are rental comps, where can you find them, and how do you use them when investing in real estate? Rental comps is a term used in real estate investing that refers to comparable rental listings that you can compare to determine the value of an investment property in comparison to other similar properties in a market.

When investing in real estate, wise real estate investors will not only look at and analyze any rental property that they believe to be a profitable investment. Instead, they will look at a large number of rental properties that are similar to one another and compare them in order to know what the average performance is in an area, and then they would identify the one/s that show a higher than average performance.

Also Read: Owning a Rental Property: Hearing From an Investor

In this article, I will explain in more details what rental comps are, what information they include, where you can find them, and how to use them in real estate investing.

Rental Comps

Typically, rental comps come in an Excel sheet or a table format to allow for easy comparison and sorting.

When looking at rental comps, you should notice that the rental properties that are being compared are similar to one another in certain aspects. These aspects can differ from one source to another. However, rental comps will generally compare these properties based on their distance from one another (or the neighborhood that they are in), their size, the number of bathrooms, and most importantly the number of bedrooms.

For example, if you’re looking at a 3 bedrooms 2 bathrooms rental property and you want to get rental comps to compare it to, the properties that these comps will consist of will almost always have the same number of bedrooms, and they will also always exist in the same area or neighborhood. On the other hand, rental comps will prioritize but will not limit these properties to ones that have the same number of bathrooms or that have the same size as the main property you’re looking at.

Rental Comps – Property Details

The main purpose of using rental comps is to compare similar properties. But what exactly are you comparing?

Depending on the investment strategy that you’re using, you will want to compare the metrics that are most important to your investment.

For example, if you’re looking to invest in a rental property, then the metrics that are most relevant to you will be the rental income, the listing price, and the occupancy rate.

So, the rental comps that you will need should include those details as well as the details mentioned before (number of rooms, size, distance…etc.).

Also, depending on your rental strategy, you might want to use rental comps that show the nightly rate for short-term/Airbnb rentals, or the monthly rate for long-term/traditional rentals.

What To Do Next?

Now that you have your list of rental comps, you will want to compare these investment properties based on the area’s average performance in order to identify the properties that have above average stats.

For example, if you’re looking at rental comps and you see 3 properties that are similar in most aspects, but one of these properties has a higher than average rental income while its price is at the average rate, then this property will obviously be the better choice.

However, this isn’t always the case. While rental comps can give you a great starting point when searching for an investment property to purchase, it is by no means sufficient to base your entire investment decisions on.

This is because sometimes, for example, a property might look great on paper because its listing price is lower than average, and its rental rate is average or above average. However, upon further inspection, you might discover that the listing price of this particular property is low because it is in a poor condition and will need heavy renovation works before it can be in an operational state and can generate that amount of rental income.

So, rental comps are more of a supplementary step that can make it easier for you to make a decision when it comes to choosing the properties that you want to consider and analyze further and will save you a lot of time that you would otherwise spend on analyzing properties with a lower than average performance.

Related: Where Can You Find a Rental Property Calculator?

Where Can I Find Rental Comps?

There are a number of ways that you can get rental comps. Traditionally, you would have to drive around the neighborhood and collect information about each property, create a spreadsheet and write down all the information, and then compare these properties.

Nowadays, however, you can contact a real estate agency or find an online MLS to obtain rental comps from, which normally comes at a price.

Related: How to Easily Find Real Estate Comps

If you’re looking for a more reliable, flexible, and easy-to-use source for rental comps, I would personally recommend Mashvisor.

Mashvisor is an online platform that provides real estate analytics, projections, as well as comps for investment properties that you can turn into rental properties anywhere in the U.S.

Using Mashvisor, you will gain access to rental comps that you can easily download using the Export Neighborhood Report functionality. You can also set a number of filters to control the type, size, age, and many other features of the properties that you want to compare before downloading an Excel sheet containing all the details and info that you need about these properties to compare them.

To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.

Additionally, by going to any neighborhood analytics page on Mashvisor’s platform, you can find a rental comps section that will show you properties that are similar to one another in that neighborhood, their ratings, occupancy rates, and other information that you can compare.

 

Finally, if you visit any property’s page, one of the several features that you will see on that page will be a table of similar properties in that area and their info, including previous sales, which can be used for planning your rental strategy, or even for selling your property to see what the competitive prices are in that area.

 

Do you have questions about Mashvisor? Click here to read our FAQs and learn about our tools.

Bottom Line

Rental comps are a great way for you to organize your search, narrow it down, and cut through large numbers of properties that aren’t worth your time.

By identifying a few investment properties that are projected to perform well in any neighborhood, you will be able to analyze these properties further and more easily determine the one that you want to purchase.

By using Mashvisor, you will not only gain access to different types of rental comps, but you will also gain access to a large selection of tools and features that you can use for all the different stages of your investment. In a sense, Mashvisor is an all-purpose workbench that real estate investors can use from the first step up of searching for a property, to the step of closing the deal, and even further for monitoring the performance of an investment property and how it compares to other properties in that area.