When you are looking for a multifamily deal to purchase you will often see an asking price, but the current rent isn’t always given. Get it under contract, and you’ll see the rents, but how do you know if those are market rents? Perhaps they haven’t raised the rent in years and are low. That’s a value-add! But, you won’t know if it is a value-add if you don’t know what you will be able to get for rent.
Market rent is the term we use to say what a similar unit (beds/baths/condition) in a similar location will receive for rent. You’ll need to look in a lot of places and write them down in a spreadsheet. Finally, calculate the median (not the mean) rent and use that. Here are some resources you can use.
Resources that are Free
Zillow Rentals, Apartments.com, Realtor.com: These will give you varying qualities of data. They will show you what landlords are asking in the area, not necessarily what they are getting.
Internet Search: Just search “apartment in [your town]” in your favorite search engine and you’ll see a list of local brokers who are trying to rent units. This is time consuming but free and accurate, except for the same caveat of the one above.
AI: Use your favorite AI engine and ask the question. It’ll give you numbers with a big asterisk – you don’t always know the truth of what it is telling you. It’s deceptively easy to use but only use it as one data point in your search, not your search itself.
Ask Local Property Managers: This isn’t exactly free. They probably won’t give you much help unless you say you are looking for property managers and interviewing them. They will be able to give you great information if they think you will use them as a property manager. Your level of deception is up to you.
Real Estate Brokers: Similar to the property managers one above, they probably won’t give you the time of day unless you are interviewing them with plan to make a multifamily purchase. They will be able to give you some data on local rents, but I think the property managers will be more accurate.
Resources that Cost Money
Local Multifamily Association: Become a member of the local group and you’ll get access to a lot of data that is fairly accurate. They often do surveys of their members regarding vacancy and rent prices.
CoStar, Yardi Matrix: these guys are expensive but claim to have accurate information. Using them for this alone is probably cost-prohibitive, but can be worth it.
Bottom Line
That’s all you need. it’ll take some time, but should give you some pretty accurate rent comps. Make sure you verify yourself if using the internet.
