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Rental Comps (or lack of).

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davebee

Freshman Member
Joined
May 27, 2010
Professional Status
Certified Residential Appraiser
State
Missouri
Hello, I am doing a single family appraisal in a small town of less than 900 and the lender wants a rental survey as it is an investment property. I have spoken with realtors, searched google, looked in the county newspaper and all I can find is a couple of apartment rentals and a single wide trailer that are rented in a neighboring town. The next closest rental is 20+ miles away in a large city which surely can't even be close to the appropriate rent for this area. The appraised value is 80k...Anyone have any methods of deriving market rent in an area without any rent comps or what I can do in this situation? T.I.A.
 
In a town of 900 there has to be at least two guys who have rental properties. Go to the assessor and find out who owns multiple SFR properties and try to interview the landlord about his current rental properties.
 
Michigan's idea is good...

You can also get creative..normally I would not suggest this, but being that data is so scarce...put an ad in Craiglslist, say you are looking for a single family house to rent. See if anyone responds.
 
Small town rent

Caution, owners of rentals in small towns often rent at less than market to keep good tenants. Ask how long the tenants have rented and if there have been any rent increases.

Most of the time the data you get is questionable, but it is all you have to use. You might compare it to the rent data listed on a site like City-Data.com for additional figures to contemplate.

Rents seam to vary little by the size (la) of the house in small towns, just by condition (quality).
 
Thanks guys, appreciate the ideas!
 
I used to have to deal with this all the time. I copy and pasted some comments from a rent survey I did that might be kind of like what you're talking about. Maybe you could use some of the verbiage if it applies.

Covelo is a very remote and isolated area and there are few, if any, rental properties under professional management. The one local real estate company in Covelo does not manage rentals. Most property owners manage rentals on their own. This makes obtaining rental data for this area extremely difficult. The appraiser was able to obtain a short list of properties which are tenant occupied through MLS listings and interviews with the local Realtor. The data is very dated but there has been no change in the rental market. Rental comps 1 and 2 are rural properties on acreage parcels with multiple single family dwellings. Rental rate is for the primary residence on these lots. Rental comp 3 is a modest SFR on a much smaller half acre parcel on the highway in town. Based on interviews with local real estate agents there is a shortage of rental housing at this time. Properties like the subject are seldom rented and when they are the rent is often often heavily discounted or no rent charged in return for watching over the property and light maintenance.

There is insufficient verifiable rental data to develop a reliable opinion of market rent for the subject expressed as a single point. Over the years it has been my observations that rental rates range from about $600 to as much as $1,000 depending on property characteristics and location. The region is very isolated and major employment centers are 1 to 3 hours distant. Many renters rely on government housing assistance (referred to as "Section 8") while others rely on relatively low wage jobs available in the community. The subjects location is remote and it's likely that it would be difficult to find a well qualified tenant able and willing to pay more than minimum rent in terms of cash. Range of market rent for the subject is $730 to $1,110 with the lower range being most probable.

You might also use the HUD FMR site to get an idea of rental rates in your MSA. Use the link below to access the page and then navigate to the area for which your subject is located. Use the tables to find the type of house most similar to the subject.

It's not a rental comp per se but the information can augment whatever else you come up with.

http://www.huduser.org/portal/datasets/fmr.html
 
I used to have to deal with this all the time. I copy and pasted some comments from a rent survey I did that might be kind of like what you're talking about. Maybe you could use some of the verbiage if it applies.



You might also use the HUD FMR site to get an idea of rental rates in your MSA. Use the link below to access the page and then navigate to the area for which your subject is located. Use the tables to find the type of house most similar to the subject.

It's not a rental comp per se but the information can augment whatever else you come up with.



http://www.huduser.org/portal/datasets/fmr.html

Awesome, thanks :beer:
 
Nothing beats a rental survey conducted at the time of inspection in the situation described. Interview the tenant about other rental properties in the area of this small town. Start walking and talking and asking, but put the clipboard away. Before you know it you will find other rental properties eventually. Sometimes the tenant is not home, so you will need to call the owner from property records to ask about the rent. If one property is rented in a town of 900, there is no way that there are not three more rentals to be found out by a diligent one.
 
Hello, I am doing a single family appraisal in a small town of less than 900 and the lender wants a rental survey as it is an investment property. I have spoken with realtors, searched google, looked in the county newspaper and all I can find is a couple of apartment rentals and a single wide trailer that are rented in a neighboring town. The next closest rental is 20+ miles away in a large city which surely can't even be close to the appropriate rent for this area. The appraised value is 80k...Anyone have any methods of deriving market rent in an area without any rent comps or what I can do in this situation? T.I.A.


"Market Rent" is most difficult to opine to when there is no (or, virtually no) "market".

My suggestions:

#1: Be very certain to include comment that your opinion of Market Rent is included solely as a requirement of the assignment. Be certain to fully explain your search criteria (time, distance, property type...whatever) for developing the opinion.

#2: Do the best you can with what you have.
 
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