One of the biggest mistakes you can make with a rental property is not charging market rents.
If you charge too much for rent, your property will sit vacant for months.
If you charge too little for rent, your property will rent quickly, but you’ll be missing out on cash flow every month!
Either way, you’re leaving money on the table. But charging too much for rent is definitely worse!
I learned this the hard way in 2016.
I was trying to rent one side of my duplex for $75 more than I should have been. It took a full month for me to realize it and drop the price.
The kicker is that I lost a full month’s rental income by trying to earn an extra $75.
Think about that.
One month of lost rental income could be worth more than an entire year of $75/month, depending on your market.
You need to find the perfect price for your rental.
Asking too little costs you money. As a result, new real estate investors often try to charge as much as possible for rent.
This often results in hundreds of dollars lost due to vacancy.
That’s where Rentometer (or maybe, Rent O Meter) steps in to save the day!
What is Rentometer?
Rentometer is the easiest way to compare your rent to other local properties.
It is very user-friendly and gives you a detailed report based on the property address, current rent, and the number of bedrooms.
Here is an example of the report it produces!
As you can see, it appears that my duplex is currently being rented for about $41/month under market rent!
Now I know that I should be able to increase the rent by $30-$40/month when it comes time to renew the lease.
That is money I was leaving on the table!
I like that it includes the average, median, 25th percentile, and 75th percentile in this report.
As you can see, this is a very simple report to read and utilize—and this is just the free report!
What Rentometer Isn’t
Rentometer isn’t the “end all be all” of market rents.
You should still do your due diligence and ask local market experts what they think.
A fun technique is to call local Craigslist advertisements and ask how many applications they are getting for their rentals. This allows you to compare images of their properties and their prices to the unit you are trying to rent out.
Rentometer is an information hub, but they don’t allow you to list your unit for rent on their site. That might be a cool outlying market for them to tap into in the future.
*Note* I tried to use Rentrange.com in order to provide you a good comparison site, but I had to create an account to even look at what their reports offered. This turned me off immediately, and Rentometer is more highly recommended across the internet, so I’m sticking to them!
Free Membership Versus Paid Membership
Rentometer offers a free trial in order for you to generate some of their reports.
With the free trial, you can run a report of five properties before needing to upgrade to the pro membership.
If you upgrade to pro, you can opt to pay monthly ($29/month) or annually ($199/year).
That sounds a little expensive.
…Until you realize that I could pay for this membership just by bringing ONE of my units up to market rent, according to the $41/month example above.
That alone would be worth the cost to me!
The Rentometer Strategy
The ways to use Rentometer vary, but it is undoubtedly a great platform to use!
Some of my favorite bits of information from the Rentometer pro report include the sale information, deed information, square footage, rental history, and current rent prices!
The sale information allows you to see when the property was last sold and at what price.
Deed information in the report allows you to see the original mortgage amount, the date it started, and the company. This allows you to look into the mortgage information and see how much equity the owner has in this property!
Being able to compare the bedrooms AND square footage of rivaling rental properties will give you a more accurate depiction of what kind of rents to expect from your property.
The rental history is useful for quieting the “what if the market crashes” fear you have and will allow you to see what the worst-case scenario looks like.
The current rent price (assuming it has been updated) is nice because it allows you to quickly analyze whether there is room for you to increase the rent!
Granted, you can find a lot of this information on the internet or through talking to the owner, but I like being able to view this information beforehand in order to go into negotiations confidently.
In his book Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple, David Greene recommends utilizing Rentometer as the first step in determining rental prices.
He mentions using Rentometer and then pulling up Zillow (or a similar website) in order to compare the rental size and condition to yours.
With Rentometer Pro, this has already been done for you, making it a one-stop-shop for determining rental prices!
Is Rent O Meter Pro worth it?
I believe it could be!
If you’re buying a single property, test out the free trial and see what you think.
Realistically, there is no reason to buy the Pro membership for a single property.
However, if you’re buying (or already own) multiple properties, this could pay for itself almost immediately and be a great tool in your chest.
Rentometer is especially useful if you are self-managing your rental properties.
I would hate to be missing out on income due to under/overpricing my rental properties!
Is it Rentometer or Rent O Meter?
I recently presented at a conference with Rentometer, and one of the questions asked on the panel was whether the company is called Rentometer or Rent O Meter. Michael Lapsley, the president of Rentometer, confirmed that the company is named Rentometer. When the logo was designed they created it with a large O in the middle so that is why a lot of people refer to it as “Rent O Meter” rather than just Rentometer.
Of course, none of this matters when it comes to utilizing Rent O Meter, but it is amusing how something as simple as a logo can effectively change the name of your company!