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There are three key factors that go into accurately predicting your rental income. And, failing to incorporate them in your real estate investment analysis can substantially affect your cash flow down the line. Below I will unpack the three factors and also explain how you can use the “Rent Range” service to determine the most accurate market rents and local vacancy rates for any property in the U.S. at the address level …
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That can be over-estimated for the purpose of making the property appear to have a higher cap rate. But, even if the property is rented, you still need to know if that tenant is paying the “market rent”. For example, a property could be rented to an unqualified tenant for above market rent. While this makes the cap rate seem higher initially, those tenants could move out or get evicted after you close, leaving you with a vacant property that will not be able to attract a qualified tenant for the rental rate you anticipated. So, always be sure you know the “market rent” because if and when your tenant does leave, you need to know the rate for which you can quickly re-rent the property to a qualified tenant. This should all be part of your due diligence regimen, and many of our clients use the "Rent Range" service to independently verify this information before closing.
Even if there is a tenant in place when you close on your property, eventually your tenant will move out and you will experience some vacancy. The question you want to ask as a smart investor is how to minimize the inevitable vacancy so that it has the least impact on your cash flow. One important way to do that is to buy in micro-markets where the supply and demand dynamics favor the investor. These are neighborhoods where there is high rental demand, resulting in low vacancy for the type of rental property you are buying. Your ability to understand localized vacancy rates--not just in the MSA but in the local micro-market where you are choosing to buy--is extremely important for you to make accurate cash flow projections. The "Rent Range" service allows you to enter the address for any property in the U.S. and see the current vacancy rate for that local area, and which way it is trending.
A snapshot is just that, a snapshot. Someone can sell you a property that looks great today, but as a buy-and-hold investor you are not just concerned about today, you are concerned with how your property will perform in the long run. And for that, you need to understand rental market trends. Are rental rates increasing or decreasing? Are vacancy rates increasing or decreasing? Smart real estate investors buy in locations where conditions are becoming increasingly favorable to investors and you need a trend analysis to tell you that.
RentRange solutions deliver an assortment of geographical data, analytics, trending and valuation services designed to help investors analyze residential investment properties at a much deeper level than ever before.
To make it super easy for the investor, RentRange offers a rental AVM (automated valuation model) which means that all you do is type in the street address of the property along with some basic info (square footage, number of bedrooms and bathrooms, and property type) and you can auto-generate a report in a split second that will tell you:
(including a “Confidence Score”)
RentRange is utilized by many of the largest institutional investors that have acquired tens of thousands of single family rental properties across the country, and by major financial institutions, valuation professionals, and property managers.
The same analytical precision used by multi-billion dollar private equity funds is available for individual investors in the Maverick community.
RentRange spent five years developing a standardized single-family rental data warehouse, and released a reliable address-level rental AVM. Prior to this, there had been no standardized repository of single-family rental data. Even national MLS information contained far too few transactions to be relevant as a stand-alone resource. Before RentRange, data was subjective, lacked data depth and quality, and failed to produce statistically sound results.
RentRange is part of the ecosystem that’s growing up around buying foreclosed and low-priced single-family homes and renting them out.
You should assume that Maverick Investor Group, LLC has an affiliate relationship and/or another material connection to all suppliers of goods and services mentioned here and will be compensated for showing advertisements, recommending products or services, or linking to the supplier's website. You should assume that all links here are affiliate links and that Maverick Investor Group, LLC will be compensated for anything you purchase through those links.
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