Oct 19

Charging
too little for your apartment or paying too much rent?

I taught business models a few years ago at Hyper Island in Stockholm. My students were fabulous and hailed from all over including Sweden, Russia, Germany, Spain, the UK and Africa. 

Hyper Island specializes in training the next generation of digital data strategists, and while I was there we focused on biz models developed based on scraping digital data from many different sources.

Yesterday, a coaching client of mine introduced me to a new one–rentometer.com. 

What is its model?

-a few free trial runs of its “rentometer” which analyzes your rental and predicts what minimum rent you should charge (if you are a landlord) and what maximum rent you should be paying (if you are a tenant)

-after your free samplers are done, you might decide to subscribe to their pro service (which I am thinking of doing… since it is highly relevant to my brokerage and coaching activities)

-they also sell tenant screening services as well as software that you can download to help you run your rental properties.

I didn’t see any ads running on their site; maybe that comes later or not at all. 

I tested rentometer on my 1-bedroom, sideyard apartment located at 1268 Henry Farm drive in Ottawa Canada. This is what rentometer showed:

image

Rentometer’s median price based on 25, 1-bed places within 1.84 miles (3 kilometers) of 1268 Henry Farm drive is $970.

I am impressed because the rent we charge for this place is… wait for it, $970.

Now I am not sure if rentometer is including EVERYTHING so their results might be biased low because, in addition to base rent of $970, we charge for utilities (which in Ontario are stupidly high–around 24.5 cents per kilowatt-hour compared to about 6.5 cents in Quebec and even in border states, prices range from 10.5 cents in Michigan to 16.5 cents in New York, ugh) and tech/multimedia package (basic cable, internet, wi-fi, Netflix…)

So the total rent we get on that 1-bedroom apartment is actually $1,241 a month.

Still, I suspect rentometer is a pretty useful guide.

What I’d need to know before recommending it is how their algorithm works and whether or not they factor in or exclude extra costs like utilities and other services.

They’re probably as likely to give me the keys to their secret sauce as Google is, whose algorithm has made Alphabet one of the most valuable companies on earth.

But what I can say is that digital data business models are thriving and, no matter what the results from them are, you still have to use your own judgment based on experience to determine what’s right for you whether you are a landlord or tenant.

For example, our tenant in that 1-bedroom
apartment is probably eligible to rent a place in rent-subsidized social
housing, which would reduce her payments by quite a bit I believe. But she has
to factor in, for example, the degree to which her personal safety might be
affected, the noisiness of the new place, the lack of responsiveness by her new
landlord, their poor record concerning repairs and maintenance, as well as frequent
rodent and bug infestations.

I
mean, what’s a good night’s rest and peace worth to you?

Prof Bruce

Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD, Ottawa Senators founder, Real Estate Investment and Business coach, Century 21 Explorer Realty Inc broker, 1-613-762-8884 bruce.firestone@century21.ca twitter.com/ProfBruce profbruce.tumblr.com/archive brucemfirestone.com

MAKING IMPOSSIBLE POSSIBLE

postscript: I ran another free trial on downtown Ottawa 2-bedroom units:

image

postscript 2: hopefully rentometer is smart enough to quote rental advice in C$ not USD for their Canadian results…

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