Find out what your property will rent for BEFORE you buy it. When I buy a property I always want to know how much it will rent for. Even when buying my own personal home I took into consideration how much I could get in rent VS. what my mortgage payment will be.
For your own personal home.. Why does it matter? Because leasing your property is your best case and your worst case exit strategy. When it comes time to move, you may or may not be able to sell your home. Best case scenario: Its time to move and you are in love with your property. You can’t bring yourself to sell. The numbers work so well, and you have plenty of cash, so you rent it out and keep it. Worst case scenario: Its time to move and the market sucks. Nobody is buying in your area and you have to rent.. But.. You made sure the numbers worked before you bought it so now you are OK.
I abide by the same rule when buying a house to flip. What if the house doesn’t sell? You should be in a safe enough position to comfortably rent it out and collect some cash flow.
I do rental properties for a living so I know rental rates (in Indianapolis) like the back of my hand. When I pull up to a property the first thing that comes to mind is “oh yeah we can rent this for 800 all day”. This really helps when I am buying rental property. I can determine a rental rate first and then work backward to get a maximum purchase price. Some areas call for the 2% rule while other areas call for the 1% rule.
When I first started in this business back in 2005 I had no idea what properties would rent for. What I did was hit the streets and learn. I would drive around and call “for rent” signs and talk with landlords and property managers. Not only was I trying to get there leasing business but I would learn about the rental rates they wanted and how flexible they would be. Beds, baths, features, deposit amounts etc.. There is always more to take into account than just the rent amount. Does the landlord provide landscaping or pay utilities? These are all things to take into consideration. The internet can provide a wealth of information as well. Check the “houses for rent” section on craigslist. You really have to pay attention to the market as a whole. You will start to notice certain properties that sit on the market way to long. Once you are able to identify WHY they are still sitting on the market then you know you are starting to understand rental rates in your particular market. If you have a rental property priced right it should lease with in 3 weeks.