How much to Rent for

[soccerluvof4]

If i were to move what would i need to rent current paid for house for. Even though we just moved here there is a chance for other reasons we might be able to move to my goal in NC into a lcol area. This is a HCOL area that we are in a small more affordable area surrounded by homes in typically in the 5-800k all the way up to 5M +. High school and grades schools are in high demand and our neighborhood though on low low end is also in demmand not a "problem area"

Paid in full 258k worth 283k so no mortgage.

House is in good shape (all main items new or in good shape) and has 2700squ feet 4 bedrooms, 3 baths and 2 car garage. Taxes are 4100$ annually and all utilites in winter are 400$ a month.

Zillow says 1895$ a month down 42$

To make this a good rental since i dont need the money per sae what would be needed to rent as an ok investment. And if so how would you rent it. Meaning would you charge rent and pay for utilites or make renters pay for it.

I am just looking for numbers at this point as to what I would need to make it a good rental to decide if better to sell if this happens in the next year or not.

Thanks

[ender]

What do comparable houses rent for in your area?

Normally you can't just pick a number and automatically get it ;)

[soccerluvof4]

What do comparable houses rent for in your area?

Normally you can't just pick a number and automatically get it ;)

I would say Zillow is right 1900- 2100$ I am more interested in the math as to what an investor would be looking for. Guess looking at it slightly backwards

[matchewed]

You can only really rent up to what the market will sustain. Determine what the market says first. Zillow may not be looking at it that way.

[soccerluvof4]

My question however is what would i need to rent it for to make it a good investment to keep as a rental. Not what i can rent it for. What i need to rent it for....and with or without me paying utilities.

I am more interested in seeing the formulas the pros use to be a worthwhile property. Doesnt have to be a homerun but a good investment.


If it makes it easier i know I could rent it easily for 2100$ a month with no problem not including utilities but again I am asking what is the number I would need to rent to be worthwhile ...more? less?

[Another Reader]

Benchmark minimum for a single family is 1 percent.  So $2,830. 

Step back and ask yourself if you were looking for an investment, is this the property you would buy?  Likely, your answer is no.  It will not cash flow well over time.

[soccerluvof4]

Benchmark minimum for a single family is 1 percent.  So $2,830. 

Step back and ask yourself if you were looking for an investment, is this the property you would buy?  Likely, your answer is no.  It will not cash flow well over time.

Thank you...thats what i was looking for. You are correct NO as an investment as that I know I would not get.

[SwordGuy]

http://www.amazon.com/Every-Estate-Investor-Financial-Measures/dp/0071603271/ref=sr_1_10?s=books&ie=UTF8&qid=1454675610&sr=1-10&keywords=real+estate+numbers

1% minimum of purchase price, or $2580.  2% is "in the money!" time.

[rothwem]

When you're trying to decide whether a rental is a good investment, cash on cash return seems to be the accepted method in the real estate world.  Since you own it though, there's no "cash", so try doing to calcuation with a hypothetical 20% or 25% downpayment. 

If you want to know what the market will support, rentometer.com seems to be pretty dead-on with regard to rent prices. 

I'm not totally clear on where they get their data from though.  Anyone with any more insight into that?

[Overseas Stache]

When you're trying to decide whether a rental is a good investment, cash on cash return seems to be the accepted method in the real estate world.  Since you own it though, there's no "cash", so try doing to calcuation with a hypothetical 20% or 25% downpayment. 

If you want to know what the market will support, rentometer.com seems to be pretty dead-on with regard to rent prices. 

I'm not totally clear on where they get their data from though.  Anyone with any more insight into that?

I actually would not do a hypothetical calculation I would try to do a real calculation based on the return of Equity. If the house is worth 283k then after transactions costs -6% there is around 266K of money that can either invested in something else or kept in the investment of the house. If the house rents for 25200 per minus 5% vacancy - 10% management - 10% maintenance - $4100 in property taxes (tenants should pay the utilities)=$14800 per year return/266k= 5.5% return on Equity. So that is not bad but an index fund would probably out perform it for less headache and stress.

as far as what it will rent for rent o meter is good, also check craigslist and the local mls listing often has homes that are being rented by agents. I have noticed the MLS tends to be on the high side of the rents.

[Bearded Man]

All expenses - gross income = x

x / 283k = cap rate or return on your money.

[Bearded Man]

Benchmark minimum for a single family is 1 percent.  So $2,830. 

Step back and ask yourself if you were looking for an investment, is this the property you would buy?  Likely, your answer is no.  It will not cash flow well over time.

Yeah and it used to be the 2% rule, unlikely unless in midwest. Good kuck with 1% rule in SF, Seattle, NYC, LA, etc.

Arbitrary percentages are unrealistic. Many deals that don't meet the 1% rule have strong coc returns.

[J Boogie]

Benchmark minimum for a single family is 1 percent.  So $2,830. 

Step back and ask yourself if you were looking for an investment, is this the property you would buy?  Likely, your answer is no.  It will not cash flow well over time.

Yeah and it used to be the 2% rule, unlikely unless in midwest. Good kuck with 1% rule in SF, Seattle, NYC, LA, etc.

Arbitrary percentages are unrealistic. Many deals that don't meet the 1% rule have strong coc returns.

In more happening areas in the Midwest, like the Twin Cities where I live, you're either a slumlord or you bought a very distressed property if you are getting 2% on your SFH/Duplex that you found on the MLS.  Both most likely.

I agree that the ideal real estate numbers are not very realistic.  But they're good for novices to have in mind so they don't envision riches and then learn over time it's costing them 75 bucks a month and countless headaches to build $170,000 in equity over 30 years.  I think the 50% rule is probably the best one for beginners to keep in mind. 

[Overseas Stache]

Benchmark minimum for a single family is 1 percent.  So $2,830. 

Step back and ask yourself if you were looking for an investment, is this the property you would buy?  Likely, your answer is no.  It will not cash flow well over time.

Yeah and it used to be the 2% rule, unlikely unless in midwest. Good kuck with 1% rule in SF, Seattle, NYC, LA, etc.

Arbitrary percentages are unrealistic. Many deals that don't meet the 1% rule have strong coc returns.

What do you consider a Strong COC return? The only way I could see getting a good COC (%20) if you are not meeting the 1% rule is if you have a very small down payment or get substantial appreciation. But then if I was looking for Cash flowing properties I would not invest in SF, NYC, LA etc, because you cant get the 1% rule there. The 1% rule to me is some arbitrary figure but is Realistic and a great place to start for most newbies and then when they get good at running the numbers they will figure out their own strategy that works for them. Could you share some specific examples of deals that didn't meet the 1% rule but had strong COC returns?