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Determining and Setting the Rental Rate (CMA)

The most important function performed by a Property Manager is Marketing and determining the Rent Rate.

Determining the rental rate is, in many cases, the deciding factor in determining if a property will be sold or rented. Like selling a property, you go through a process of comparing your property to that of others in your market.

Property Managers will tell you they are doing a detailed analysis of your property as compared to others in the same neighborhood.  These details include the surrounding neighborhood, year built, block location, roof condition, proximity to parks, shopping, bus lines and anything else that could be a hot button for you. However, Competitive Market Analysis Reports CMA are focused on the neighborhood where your property is located by zip code and based on a simple computerized numerical evaluation of square footage and the number of bedrooms and baths.  The CMA calculates a median rental rate range meaning that there are as many rental rates above as below the median rental rate.

All Property Managers use some type of property management software.  There are several software products, however, most companies use one of the top 5 which are Rent Manager, Hemlane, AppFolio, Yardi Breeze and Propertyware. APMPros uses AppFolio and we love it!

One of the main features of property management software is the CMA feature.  At the push of a button, the software program instantly compares all the rental rates for properties in its database received from all property managers using the same software including data received from APMPros.  To generate a CMA, all that is required is the rental address, number of rooms, square footage and zip code.  The zip code identifies the neighborhood and the software program matches a range of comparable properties within 1 to 5 miles of your property to determine the range of rental rates and what the median is.

Below is a sample CMA outlining everything you need to know to set a fair and reasonable rental rate.

Looking at this sample CMA below for a 3-bedroom, 2.5 bath property with 1978 Sq. Ft of floor area, we are able to determine that the Median rental rate is about $1,950 and the high-end is $2,375.  Looking at your property compared with others in the same neighborhood, you will quickly determine where your rental rate will fall in the mix. If you have the nicest house on the block, you are on the high end and ,if you have the worse house on the block, your rent rate will be on the low end.

cma

How hard is it to generate a CMA?

All any Property Manager has to do is put your property address, number of rooms, and square footage into the database and enter it into the software, which does the rest. The Property Manager may want to search the property online, review the online photos, and check Google Maps (street view) to determine where on the CMA your property falls and send you an email outlining the CMA. The CMA is shockingly simple to perform.  A CMA takes about 25-30 minutes using the right software tools.

APMPros has an On season marketing plan, May thru August are the busy season for rentals and, a Slow season marketing plan during September thru April.

On season or busy season, the summer marketing plan is to start high on rent rate and work down until there is traffic on your rental property.  For example, if you are hoping to get $2,350.00 but will settle for $2,150.00, start your rent rate at $2,450.00 and lower the rent rate every couple of days until you get traffic on your rental property.

Slow season the winter months, are very slow rental months and require you to be competitive.  During the winter months, school starts in September and most parents do not want to change schools, October starts the Holiday Season, December is Christmas, January 1st starts the New Year, and tax time fast approaches- traffic does not pick up again until March or April.

The CMA and marketing is included in the APMPros Flat Fee Management Program.


Glossary

Property Managers A property manager is a third party who is hired by a landlord or property investor to manage the day-to-day operations at rental property.

CMA A CMA Report is a Comparable Market Analysis. It is a study of what other “like” properties are selling for and their asking prices. It will give you an idea market value of a subject property.

Median rental rate the “mean” is not the “average” you’re used to seeing. where you add up all the numbers and then divide by the number of numbers. The “median” is the “middle” value in the list of numbers. Median rent rates are calculated by the RTA and provide information on typical rents for recently rented 1, 2 and 3-bedroom flats or units, 2, 3- and 4-bedroom houses and 2 and 3 bedroom townhouses in -A real-time application (RTA) is an application program that functions within a time frame that the user senses as immediate or current.

Management software Management software is that which is designed to streamline and automate management processes in order to lessen the complexity of large projects and tasks, as well as encourage or facilitate team cooperation, collaboration and proper project reporting.

AppFolio Use AppFolio To Streamline Your Business and Increase Efficiencies. This is the database APMPros uses.

Neighborhood the area surrounding a particular place, person, or object

Database These programs allow users to enter data, store it, protect it, and retrieve it when needed.