Rentometer is the easy way to compare your rent with other local properties. But how accurate and valuable is it really? Learn more...
One of the less talked about parts of being a landlord is the numbers behind each property. What does the cash flow look like, or the capitalization rate? Figuring out all the figures before jumping in is vital then if you want to be successful investing in property.
In this article we look at Rentometer which is one of the tools we’ve discovered that aims to help give investors a better overview of potential investment properties.
Rentometer is a website that gives users an estimation of what rent prices are in the neighborhood.
Simply enter the property address, a dollar amount of the monthly rent, and the number of bedrooms of the rental unit. Rentometer will then compare this with its database and tell you how this property looks compared to other like properties in the vicinity.
You get a super quick overview of a property along with some helpful visual aids.
To establish how valuable Rentometer really is, we need to first understand how valid the data is. To establish that we need to know where it’s coming from and whether those sources are reliable.
After exploring their website for a bit I found this explanation for where they get their data in their help center:
“Rentometer provides rent comparison data throughout the U.S. Our data is primarily listings data i.e. to be rented.
Though we don’t give out specific names of our sources, Rentometer collects rental listing data and rent data from a variety of sources including: bulk syndicated data, our proprietary rental data survey, and user-generated input and listings of rental data.
New data is added every day including new records and updates of existing records as they become available.
Our data coverage is national. Our volume of data is proportional to the volume of rentals in any given market. Urban areas and metropolitan centers tend to have more data because there is greater rental activity and density. Suburban and rural areas tend to have less data because there is less rental activity and rentals are dispersed over a larger area.
We are always looking for new ways to acquire data and improve our data set.”
What this suggests is that most of their data is being aggregated from public listing data, with a very small segment of it coming from individual landlords and property owners who submit their data manually.
The next question has got to be how accurate is Rentometer. We still don’t have any specific ideas as to where they get their data, so we need to really think about reliability.
Probably the biggest problem with Rentometer (the free version), at least in my books, is that is a very simple view of property data.
After only entering three pieces of data
They give you estimates. However, this isn’t a lot of information to go off and ignores a plethora of other information that can have a big impact on a properties value and rental amounts.
For example, other factors that should be considered when evaluating a rental property include, but aren’t limited to:
While a couple of these things are taken into account when you use the upgraded pro version of the software (namely, the number of bathrooms and property type), it’s still just a high-level overview of the area and doesn’t offer much clarity on the specifics of any single property.
The pro version offers a much more detailed analysis of your property giving you a collection of more useful than the free version data.
If you want to drill a few layers deeper and find more supporting information on what rent prices are in your area, Rentometer Pro may be worth considering.
Here are several of the key features that come with the pro version.
The Rentometer Property Report goes much further than showing a simple gauge and map of the area. This will provide you with much more relevant detail on each property.
If your primary objective is to evaluate and purchase a rental property, there are a few things I think are particularly useful from this report.
These things can directly impact the analysis of a property, and potentially affect an investor’s decision on how much to offer when purchasing a new rental.
There are other methods and places to collect this data, however, Rentometer makes it easy and fast and packages it all up in a neat little package.
This is a super simple way to quickly get a much more detailed analysis of the property you are investigating through a comparison of it against other rentals on the market.
Plus with Rentometer Pro, you can specify how far back the data should go, and how large the geographic radius should be from your target property.
The Batch Analysis tool is designed for users who need rent statistics for a whole bunch (or batch) of different properties but don’t want to run individual reports for every single one.
As we mentioned earlier getting accurate and reliable data when analyzing any potential investment properties is incredibly important and it’s sadly never going to be as simple as plugging in three pieces of data.
Double-checking and triple checking data against multiple sources is your best way to get the most accurate data.
The most accurate way to get the best up-to-date data though is still by contacting experts and professionals familiar with the local market. For example, get in contact with a local property management company and ask them: “If you were managing this unit for me, what would you charge each month for rent?”
Using their professional resources as well as their wealth of experience they will likely have a very good idea of what they could charge for a property like that.
Rentometer is an excellent tool. And well worth having in your arsenal. It’s fast, simple, and largely, at least in our experience fairly close to the money. However, no tool like this is going to be 100% accurate. There are too many variables to consider.
However, if you’re looking at a new market, neighborhood, or zip code and you’re not intimately familiar with what normal rent rates are, Rentometer is invariably useful at showing you what the “range of acceptability” is from other landlords and property managers in the same area.
Of course, you could go and analyze a bunch of different websites like Trulia, Hotpads, Craigslist and pull up a selection of similar properties, make a spreadsheet and create some aggregated data of your own. However, that’s time-consuming and you’d get better results in under 30 seconds from Rentometer. In this way, it’s hard to beat what Rentometer brings to the table.
Our final thoughts on this are that it has value, but it’s not going to ever be able to replace the educated opinion of a knowledgeable agent who knows all the dynamics of a particular market, who has their feet on the ground, and years of experience dealing with property in that area.