You've received the advice of many Realtors across the country. While that is helpful, nothing is more helpful than a real estate professional in the local area. I had an agent call me recently and ask me what I thought the home would rent for - without even pulling comps and describing the property I was able to tell him based on my experience with investors and the local area.

That is the added value of an experienced agent!

I would say call local leasing companies that have rentals in the areal you have purchased or the area you want to purchase in. If you are looking for a property to purchase, I always do a worksheet to see if the property will cashflow from the beginning. I live in the New Bern, NC area. If I can ever assist you with buying or selling properties feel free to call me. I would also be glad to send you the worksheet I use in making my purchasing decisions. Just email me.
Denise Staton
252-349-9515
dstaton@kwnewbern.com

Mary,

Of course the best time to know the answer to this question is before you buy the home. Sorry to state the obvious, but I am finding that some folks who had hoped to be sellers are now landlords instead. If they purhased recently they are finding that they can't simply apply the 1% rule and rent out their $240,000 home for $2400 a month.

On the other hand, there are still many properties for sale in our market here in Pennsylvania that have a decent cash flow. All of the answers that have proceeded mine have given good information. The main thing that I find investors underrate is the value of the capitol they have tied up. That really has a downward pull on the profitablilty of being a landlord here. If I have owned a property for a long time I should either raise the rents to compensate for the increased value of the building, or sell the thing and put my capitol to work for me somewhere else. Just a thought!

Eileen Musser, Serving South Central Pennsylvania

Mary,
Don actually has the best answer so far. Although Jonathon hit the key points. You need to take in ALL your carrying costs that Jonathon mentioned hopefully the mortgage payment has taxes and insurance escrowed in. Be very careful with your maintence account also. Plan for the worst and you will always be ready.
But, as Don stated the market will also determine you rental income. So you will need to check out your competition and see what comparable homes near you are renting for.

Hope this helps,

Larry Story
Coldwell Banker Triad

The rental price for a house is based on market demand. The best way to determine it in your area is to see what comparable properties are renting for. A Realtor can help you; many are listed on the MLS. However, you can also check your local newspaper, or check CraigsList.

Yes, in general, home prices do affect the rental amounts, but these can vary widely from community to community. For instance, In Baltimore a rowhouse that sells for $160,000 might rent for $1,200 a month. In some communities near Washington, D.C., the $1,200 a month rent might be for a townhouse that'd sell for $400,000.

There are many factors that really determine/influence market demand--affordability of housing (not just the price of housing, but the price in relationship to median household income), age of housing (it's likely that newer houses in newer communities have larger mortgages, and so the owners need more in the way of rent to help cover their mortgages), and so on.

And then there are the specifics of the house and the community--convenience to parks, shopping, and transportation, for instance.

But--whether you're a renter or a landlord--to be competitive you have to know what others are paying or charging for similar accommodations.

try these websites for fun, http://www.zilpy.com or http://www.rentometer.com

I live in Minnesota but I have a excel worksheet that is a cash flow analysis if you really want to crunch some numbers to find out your ROI on your property

There are lots of people out there who will give you formulas to use. These are based on what your ROI should be, etc. In Apex the 1% rule rarely works as our housing market is so strong. The "common sense" approach is to look at the competition and price accordingly. Many websites show homes for sale, but not those for rent. Find a site that shows current homes available for rent (feel free to use ours http://www.HeatherO.com then "search mls listings" then click on the advanced tab. check rentals at the bottom). Bear in mind that these are homes that have not rented. Some may have just come on the market, some may be sitting because their price is too high.
Of course, you can use an agent who is experienced in this market to help you. Many people don't realize that you can hire an agent just to get the property rented without paying them to manage the property long term. They will usually charge a nominal fee such as one months rent for example (fees vary). This will also expose your property to thousands of agents and prospects through the MLS and the hundreds of websites that post these listings as well. They will show the property, keeping you from having to show it every time, and they can screen the prospects as well. This is often well worth the fee!
There are only a few rental agents in our area. Feel free to contact us directly for our recommendations.

If you're planning to rent you home, consider the following fees as well:
- Monthly Mortgages (if any)
- Fees for property management
- Exterior Maintenance
- Cushion amount for repairs above and beyond security deposits
- HOA Fees

Your real estate professional can assist you with that. She or he will do a comparative market analysis of other rent properties in the area and give you a range that you could expect to rent your property for.

Check our your local paper and visit some property management firms in your area. Ask for lists of properties for rent and if you have time, even drive by to look at neighborhoods and general areas. You want to be competitive with what other houses are going for that area the same number of beds/baths/square footage and even comparable neighborhoods