Posted by KC Questions on October 25, 2001 at 12:32:15:
I would check in the Sunday edition of the KC Star and in the Thrifty Nickel and Pitch Weekly to find out comparable rates
Setting Rent of First Rental Property - Posted by Joe
Posted by Joe on October 23, 2001 at 11:47:55:
We’ve just purchased our first rental property. It’s a great 2 BR 1 BA home in the Kansas City Area in a great school district two blocks from a school. It was currently being rented for $550 per month as is. It’s dirty and I’d like to paint the inside and outside, put up some inexpensive shutters, screen door, and recarpet. How much is all of this worth? $600, $650?
It needs some work but a little elbow grease will go along way. We purchase the property for $49k, a similar home down the street sold for $69k that was cleaned up.
Any thoughts? Any suggestions for finding the first renters? We want our first experience to be a good one.
thanks,
Re: Setting Rent of First Rental Property - Posted by Craig (IL)
Posted by Craig (IL) on October 23, 2001 at 20:51:53:
I’m surprised that your asking now after you bought and fixed it up. You didn’t know what your return would be? That’s taking quite a chance. I shoot for no less than 19% return on my money (rents and immediate tax benefits vs all costs including PITI, maintenance, etc).
To see what you can get, there’s several good suggestions here. Another one is to find out what units similar to you have rented for RECENTLY. To do this go to the library and look up rental adds in the last few months in newspaper archives. Find rentals that may be similar acording to the ad, or ads that list a price that may be what you’re thinking you can charge. Then call those owners and find out what they got, how much, how long it took, etc. In my market rental rates vary widely. I think that’s because owners don’t know what other charge. So, look to see if this is true in your area.
Also, if there are any large complexes nearby, that may be an indiciation of what the market is like. A really nice complex would define your market at the upper end, a rather poor complex the lower end. Complexes in less populated areas define that market.
You want to get what the market will bear.
Re: Setting Rent of First Rental Property - Posted by John
Posted by John on October 23, 2001 at 20:07:30:
The price of your improvements shouldn’t be the driving force behind your rental rates. Rates should be driven by what the market will bear. If the rent that you can charge will not cover the costs of improvements, then perhaps the purchase wasn’t the wisest. This should have been a consideration prior to purchase. On the other hand, it is possible that you are limiting your rental income by the value of improvements as well.
The only true answer is what the market will bear.
Good luck!
John.
Re: Setting Rent of First Rental Property - Posted by L. B. Ed
Posted by L. B. Ed on October 23, 2001 at 19:12:49:
Have a broker show you similar apartments that are available…
Make yours a bit nicer than the rest and charge 10% -20% more – it will eliminate the dirtbags who can’t afford the rest as they will be attracted to the cheaper places.
This should help you get someone with a few extra dollars who is willing to pay more for a nice place.
Whatever you charge, tanants will fell they are getting ripped off, so go for the top dollar. Make the place as if you would live in it…
That’s worked for me, and my places are among the top dollar rentals in town.
Ed
Re: Setting Rent of First Rental Property - Posted by JFinke KC
Posted by JFinke KC on October 23, 2001 at 14:18:58:
I know (kinda) an investor in the midtown/east of Troost are that rents 2 bed 1 bath SFHs for $650 through Section 8.
You say your house is in Lee’s Summit. I looked at some 2 bed duplexes in Lee’s Summit a couple months ago and the rents were in the $800-850 range. These were brand new construction so that may be a little high. Check the classifieds and see what others are advertising for, call some to confirm and compare notes.
BTW, I’m in Belton, but own property in Midtown area.
Good Luck,
JFinke KC
Another Hint - Posted by Wayne-NC
Posted by Wayne-NC on October 23, 2001 at 13:35:00:
Try to figure what your renovations will cost in terms of a monthly expense. For example, if you spend $4,000 to do the job and you can borrow at say a rate of 8% or cash in a CD at 4% for the money, your payment (or income lost) would be between 13 and 26 dollars per month. You raise your rent by 50 IF THE MARKET WILL ALLOW IT as determined by your analysis as Tim(CT) pointed out and it would be well worth it to do the job. It adds equity to the property as well. Be sure you have good tennants too as he said or they will ruin your nice job.
Re: Setting Rent of First Rental Property - Posted by KC Questions
Posted by KC Questions on October 23, 2001 at 12:08:43:
What part of KC is it located in? Is it in midtown, Raytown, Independence, Grandview, North KC, KCK, Overland Park? What school district is it by? What sets your property apart from others in the neighborhood?
Re: Setting Rent of First Rental Property - Posted by Tim(CT)
Posted by Tim(CT) on October 23, 2001 at 12:00:02:
Your first step is to find out what the rents are in the same area for the same type and size of the rental. This is really the only true way to find out what the after-rehab rental value would be for your unit. I did this basically by picking up the paper and started browsing the ‘apartments unfurnished’ (my unit was unfurnished) section. I determined which units best fit the description of my unit, took a ride by to look at the exterior and also took a look inside the unit. This gave me a good idea of what I could get for my rental.
As far as getting good tenants, do credit checks against every adult on the application. I place alot of my selection criteria on the credit score that comes back but not all of it. There are some other factors that I do look at but the credit score is the highest.
Good luck
Also, check out www.mrlandlord.com. This gives you a wealth of information on landlording. Much more than this site will. This site is geared more towards purchasing a property.
Re: Setting Rent of First Rental Property - Posted by Joe
Posted by Joe on October 23, 2001 at 21:33:35:
I bought this house to sell it quickly. The purchase price was $49 from a widow. A similar house two blocks away sold for $69 two weeks ago. My first inclination was to turn the home quick, but now I think it would be better to rent, and that is why I never calculated the return initially.
Is there any software out there that helps compute returns on investment based on purchase price, rents, fix ups, etc.???
Thanks for helping a first timer!
Re: Setting Rent of First Rental Property - Posted by Joe
Posted by Joe on October 23, 2001 at 12:11:40:
It is in Lees Summit. It is on a great street with older residents in other homes in the neighborhood. Only two blocks from the grade school.