One of the toughest challenges in real estate ownership and in looking for a property to rent is determining the monthly rent on comparable, already-leased units. While the rent “asking price” on properties is important, in a perfect world you really want to know what the final negotiated rental amount was because it may have been considerably lower than the advertised asking price. Unfortunately, those actual agreed upon lease rates are quite allusive so you really have no choice but to use the asking price listing information to help you evaluate a property or negotiate a better deal for yourself.
Conversely, finding out the “sold prices” of homes is easy because they are recorded at the county courthouse after a sale is complete. But rental rate “sold” or better termed, agreed upon rental rate, on completed leases are not publicly recorded. Luckily, there are a few places that can help investors (and you!) figure out where rates are headed and several sources of monthly rates of comparable rental listings. Here is some information and website that can assist you.
Just yesterday, Zillow.com released a new rental property rate index to help individuals better assess where rents are heading in a particular area. This is the first of its kind. Now, home price index gauges have been around for some time, like Standard and Poors' Case/Shiller Home Price Index, Zillow.com's Home Valuation Index, and information released by the National Association of Realtors and local Realtors Associations. But Zillow's new rental index will potentially help people make better decisions on investing, renting, and on buying a home if they think rental rates may go up!
The Zillow Rental Index and Rent Zestimate, according to Zillow, is “Zillow's estimated monthly rent price," which is "computed using a proprietary formula.” But this estimation is primarily an average figure, taken from the listing price of the property, not that hard to get actual agreed-upon rental rate.
The price that a unit actually rented for is private information that only the landlord knows, as there is no publicly required disclosure of this amount. The only way to find out the actual amount is to ask the owner directly, or better yet, ask to see his or her tax returns! And best of luck with that. So we must live with listing prices. Additionally, we also don’t know how long the unit was empty, nor any concessions that were given, like a half month’s rent, or if the landlord decided to cover part of the utilities costs for the renter. Those concessions obviously impact the actual rental rate of the property, and all of this is private information, which makes it tough to ascertain exact rental amounts.
A few other places can help you determine listing prices to assist you, whether a landlord or renter, gauge the market. But again, all of these are based on listing prices, not on the actual agreed-upon rent.
Craigslist is the best accumulation of information about rental listing prices. It seems that everyone places their ads there. And why not? Ads are free to place for the most part, and it's easy for the poster to post and the searcher to search. In addition, this site allows you to post pictures with the ad, making it one of the top places to find information about available rental units. The only drawback is that that they don’t do a better job of displaying the information with mapping the location and information in a graphical interface. But despite that, it's still the best we have today, simply because of the volume of data collected by them.
Other rental sites do a much better job of mapping and making it easy to search for relevant data. Zillow and Trulia have got it down and make it much easier for finding a unit and/or find comparable rents for investing purposes. These sites, however, don’t seem to have enough data and listings yet to make them world class. Hopefully, as landlords and renters become more aware of these tools, the databases will collect more information and become the top place to shop for rentals.
There are also sites like Rentometer, which is helpful and easy to use, and Finestexpert , which has great data, but is harder to use. Each of those, plus Craigslist, Zillow, and Trulia have different features, amounts of data, and ease of use, so it is probably best to review and understand what each of these provides and then determine what is best for your purposes.
Lastly, calling landlords, stopping in at apartment rental offices, and talking to local real estate professionals will also help. These are all great sources of information, but they all take a lot more work than if there was just a great easily searchable database of all the valid and relevant information like one has with property sales prices.
Gathering actual rented monthly pricing and information has never been easy nor inexpensive, so it’s the hard work that you must do to figure out better numbers. Hopefully, someday an innovative company will solve this conundrum for us!