Multifamily Rent Analysis
I have been assigned to do a rent comps analysis. (Somewhat at a more granular level) I have the actual rent roll of the property we are trying to acquire where I can calculate the actual leased rent amounts for different units. For comparable properties though, however, I have to rely on market rents, which could be found on the property’s website, apartmentscom and etc.
As many of you may already know, apartment rents, just like airline ticket prices, can change quickly and drastically based on availability, move-in dates, and so on. Prices could change multiple times in a day. Most importantly, the spreads are sometimes so big that they are completely out of line with their starting rents that they advertise.
I tried calling the leasing office posing as a potential resident, and they even told me to look out for the cheapest rate online by checking everyday and lock in once you find the price you are comfortable with. Therefore, it is very difficult to peg the actual lease rates against others, making it extremely difficult to conduct an accurate analysis on rent disparity in the market.
How do you do your rent comps analysis?
Any advice will be appreciated!
Rents do not change that quickly. Just use what you find if it appears reasonable.
Look for similar product in your subject property's submarket. Call the leasing offices/look on the websites. Rents are nowhere near as volatile as airline ticket prices - so do not overthink it. Just use what you can currently find, minus any anomalies.
In my past life I used to do all kinds of rent comparable studies and rent comp analyses when conducting appraisals. The easiest way is to be upfront. Say that you're conducting a valuation/appraisal and would appreciate help in understanding what present rental rates are at the property. They get this all the time and 3/4 of the time are more than happy to help. You don't need to call in and pose as a prospective tenant.
Also, before you call in, look at the website and get an idea of the sizes of units and the types of units they have so that you can prepare your matrix/questions about amenities in advance.
Another thing to keep in mind is that apartments.com and other similar sites are hopelessly inaccurate (i.e. outdated) with regard to rent. If accuracy is important, DO NOT USE ONLINE INFORMATION. Like I said in my first paragraph, call the apartment and be upfront and ask them what the present rental rate is that day for available units--they should have this information even if they use LRO or similar daily supply/demand rental software. If there are comps at the building that have no availabilities, ask what the most recent rate was for a leased unit. Oh yeah, and be obnoxiously friendly. It's very difficult for them to tell you to go fornicate with yourself if you are being really friendly and respectful.
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