Introduction

Conducting thorough research is crucial when looking to invest in rental properties. A good understanding of the local rental market will help you make informed decisions and avoid costly mistakes. Follow these steps to effectively how to research rental market:

Gather General Market Data

• Rental rates and vacancy rates – Look up the average rental rates, historical trends and vacancy rates for different property types (e.g. single-family, multifamily, condos) in the neighborhoods you are considering. This will give you a good baseline to understand the market.
• Local economic health – Factors like job growth, household income and population growth impacts rental demand. Review market reports to gauge the overall economic health of the area.
• Impact of colleges/universities – Student renters can significantly impact vacancy rates and rental pricing in college towns. Research how local higher education institutions influence the rental market.
• Crime rates – Tenants avoid high crime areas. Check NeighborhoodScout or local police reports for crime data.
• School district information – Top school districts attract families and can indicate strong rental markets. Research school ratings on sites like GreatSchools.

Drill Down by Neighborhood

Rental demand varies greatly by neighborhood. Gather granular data on specific neighborhoods you may invest in:

• Demographic data – Age, income levels and other demographics impact rental demand. Sourc demographic data from sites like Esri or local government sites.
• Development projects – New residential/commercial developments bring renters to the area. Check municipal sites for upcoming development plans.
• Local amenities – Things like parks, restaurants, nightlife attract renters. Visit neighborhoods to understand attractions and drawbacks.
• Commute times – Easy access to jobs and transit lines are ideal. Research average commute times.
• Walkability scores – Walkable neighborhoods command higher rents. Check WalkScore.

Analyze Comps (Comparable Properties)

Study rental comps for properties similar to your potential investment:

• Listings sites like Zillow and Trulia provide rental comps and market trends.
• Drive through target neighborhoods and look for ‘For Rent’ signs. Jot down details like rent, beds/baths, amenities.
• Reach out to local property managers and real estate agents to ask about prevailing market rents and demand in the neighborhood.
• Look for small multi-family buildings and complexes similar to your investment property and gather data on current rents and vacancy rates.

Key details to capture for comps:

Talk to Local Experts

Connect with specialists who can provide insights on the local rental market:

• Real estate agents – Ask about rental demand, typical rents, vacancy rates, seasonal changes, and landlord responsibilities.
• Property managers – They will know granular details on rents, amenities, requirements in specific neighborhoods.
• Market analysts – Analysts study the overall housing market. They can provide big picture trends on supply/demand.
• Local landlord Facebook groups – Online landlord communities share insights on managing properties in the area.

Also Read:

https://metawaynow.com/how-to-invest-in-stocks-online/

Drive the Neighborhoods

See rental properties and neighborhoods in person:

• Drive through target neighborhoods at different times of day/week. Observe activity levels, amenities, maintenance, street parking etc.
• For multi-family, note details like common areas, amenities, tenant demographics and occupancy rates. Knock on doors to get tenant feedback.
• Observe for sale and for rent signs. Call numbers and ask questions.
• Talk to people in the neighborhood to get insights on demand, feel for the community.

Driving through gives you on-the-ground insights that data alone can’t provide.

Balance the Data and Your Gut

• Use data like rents, vacancy rates, demand indicators to make objective decisions.
• Combine that with your first-hand observations and gut feelings on the neighborhood.
• For example, a neighborhood may have strong demand indicators but feel unsafe or inconvenient.

Collecting and analyzing hard data gives you the facts. Visiting neighborhoods provides the experience and intuition. Balance both for the best rental market research.

Thorough rental market research requires compiling data from diverse sources and visiting potential neighborhoods in person. Following these tips will provide the insights you need to make smart investment decisions and succeed in your market. Remember to frequently how to research rental market – successful investors continually keep a pulse on emerging trends in their area.

Reference

• https://www.biggerpockets.com/guides/find-evaluate-rental-market