Fair Rental Value - Landlord Forum thread 325970

Fair Rental Value by John Farmer (Florida) on October 20, 2014 @04:08

I have heard that fair rental value is 1% of the purchase price, or of fair market value. However, I have been looking on craigslist and found that the rates on there were substantially higher for similar houses. Hundreds of dollars of difference. This is a very important figure in estimating whether something will be a good investment.

I do have someone who may be willing to cosign if I can show him that the numbers work.

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Re: Fair Rental Value by Anonymous on October 20, 2014 @12:03	[ Reply ]

Yippee.

Re: Fair Rental Value by Joel on October 20, 2014 @13:09	[ Reply ]

Fair rental value is more accurately figured by comparison with other comparable rentals in your area. It is not merely a simple formula based on resale value. The type of area, supply and demand, condition all play a part.

Re: Fair Rental Value by Monica (Ohio) on October 20, 2014 @23:28	[ Reply ]

That isn't the return I would look for. I wouldn't pay $80,000 for a house that would only rent for $800.00. You can expect your payment including escrow for taxes and insurance to exceed that amount, where is the profit? How about vacancy loss, advertising, repairs and rehab between tenants? I know the days are over for the huge bargain but there are still profitable properties out there. Since 2008 until last year we took advantage of the market and bought as many as we could. These required some work and costs for repairs/remodeling. A $55,000 purchase, rents for $1200, another one (two homes on one lot) for $59,500 we collect over $1600/mo. Another one for $52,900 rents for $900/mo. One for $24,000, rents for $900. One for $28,000 rents for $850. All of these rents are more than the 1% of the purchase price. I can still find similar deals, there is a house I am considering looking at, asking $49,500, it would likely rent for $900.

Re: Fair Rental Value