{"id":13797,"date":"2010-12-23T08:34:44","date_gmt":"2010-12-23T16:34:44","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=13797"},"modified":"2011-02-09T22:58:12","modified_gmt":"2011-02-10T06:58:12","slug":"analyze-a-below-market-deal-nearby-rents","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2010\/12\/23\/analyze-a-below-market-deal-nearby-rents\/","title":{"rendered":"Analyze a “Below-Market” Deal: Nearby Rents"},"content":{"rendered":"

Unfortunately when you’re looking at single-family homes, it can be difficult to get an accurate read on what people in the neighborhood are currently paying<\/em> in rent. However, studying asking<\/em> rents in the rental section of Craigslist is the next best thing, and it is definitely better than nothing.<\/p>\n

\"Cheap<\/a>
photo by The Tim<\/a><\/div>\n

Do a search for the neighborhood the home is in, and open every single listing that looks like it might be nearby and comparable. It shouldn’t be too difficult to get a list of at least five or six nearby similar homes that are currently up for rent.<\/p>\n

In our example scenario, we searched Craigslist and found six rental homes nearby with similar characteristics (3 bedrooms, 1.5-2 bathrooms, 1,500-2,000 square feet). The average asking rent was $1,425 a month. If we put 20% down on the $190,000 home, our total monthly payment (PITI) on a 30-year fixed-rate loan at 5% would be around $1,050 a month. With payments about 25% lower than the asking rent on comparable homes, this home is not a screaming deal, but the price does seem to be below market.<\/p>\n

I would say if the total monthly payments on a home would be more than 20% below the monthly rent you come up with in your research, you might be looking at a home that is priced below market.<\/p>\n

How To: Analyze a “Below-Market” Deal<\/span><\/p>\n