REVIEW: Using Neighborhood Scout and the MLS to Analyze Rental MarketsNov 28, 2021
Full Review: Neighborhood Scout has helped us to analyze a rental market when there might not be any good comps. Our hosts discuss how they've been able to make new construction multifamily decisions supported by Neighborhood Scout reports and the local MLS.
Something that I found valuable, and I think I've said this on the show before... If I see a low vacancy rate, (this market I'm looking at as a 2% vacancy rate) that tells me, okay, there's got to be a need for more inventory.
I looked at comps, the newest apartment complex was built in the early nineties. Right. So, I'm going okay. They got it there. Our unemployment rate is low vacancies, low housing stock, old. Right. I'm looking at all these things. So, what I wanted to be careful about is there fish in the pond?
So I used a website called Neighborhood Scout and you can get this information from a bunch of other places, but I use neighborhood scout to find the median income for the area. And you know, when we had Lane Aldrich on a couple of weeks ago, he would tell you lenders to gauge whether somebody can afford a mortgage or a rent payment.
They like it to be what I think, 33 to 35% of the monthly gross income. So, I'm looking, what is the median salary for the area, and are the rents that I think I can get that are a little fuzzy because I don't have a lot of. Are they more than that? Are they more than 30 to 35%? And if they are, there's probably not a lot of fish in that pond, right?
There's probably a reason why some other developer or builder hasn't come in there and put up a bunch of units. But if the average salary can afford what you want, I, to me, that might be a very bright green light where you say the market is wanting more in inventory. What do you think about that?
Sherida Zenger: I agree, and I also think even maybe looking if there's. A lot of data looking at what single-family homes are selling for, what are people purchasing? And then what would their mortgage roughly be on that now kind of back into it that way and say, okay, so they're willing to pay this to owner occupy something, right.
To live in this property and own this. And there's a lot of people that are tenants that can't quite qualify, but they do make some good income. So maybe just saying, okay, maybe we need to be a little bit below what that is or close to, but I think, I mean, that's another avenue to go down.
Using The MLS To Analyze Build-to-Rent Markets
Our MLS in Utah for leases is garbage. It's completely useless. But yesterday, I was doing a little secret shopping on a property manager we use in Texas. And I had w well, John, one of our key contacts pull the MLS data. They have a great MLS for leasing data.
I can see average days on market to rent. This unit in this project is 24. Right? Here's the price you can see it's all right there. So, you might have a very robust MLS in the market that you're looking at as well, which could tell you where these rents are going to come in.
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