How to Run Rental Property Comps

How to run rental property comps is the job of pricing one door against a handful of nearby rentals that a tenant would actually compare. Same type of unit. Similar size and condition. The same kind of lease. Rents that were achieved, not rents that have been advertised and ignored. A metro average, a national vacancy rate, and a housing-agency rent ceiling are context. They are not the comp. The rent you put on the lease is a property-level number, and it has to survive a tenant who has seen the house three blocks away.

Illustrations here are not a rate quote and not an offer of credit. An inquiry is not an approval.

How to Run Rental Property Comps on This Unit

Pick the subject first, in one sentence. A three-bedroom house, about 1,400 square feet, original kitchen, tenant pays electric, twelve-month unfurnished lease, on a particular street. Every comp has to be a plausible substitute for that sentence. A downtown one-bedroom is not a substitute. A furnished weekly rental is not a substitute. A renovated flip with a new kitchen is a substitute only after you adjust for the kitchen, in dollars you can explain.

Stay close. “Nearby” means the tenant’s alternatives, which are usually the same neighborhood and often the same school path and the same kind of street. A mile can be a different rent. If you have to drive to another town to find three leases, say so, and lower your confidence. Thin evidence is still evidence. Pretending it is a deep market is how asking rents drift.

Match beds, baths, and size. A third bedroom is not a rounding error. If the only leases you can find are 200 square feet larger, adjust and show the adjustment. A per-foot fudge you cannot tie to a pair of real leases is decoration. Two houses on the same block, one with a garage and one without, are allowed to differ. Write the garage into the note so you do not “average” it away.

Match condition. Original finishes rent differently from a renovated kitchen and baths. If your subject needs paint and the comps were updated, you are not at their rent. Price the subject you have, or price the subject you will have after a named scope of work. Mixing “as-is” and “after the renovation” in one average is how a pro forma rents a house that does not exist yet.

Match the lease. Long-term unfurnished, furnished mid-term, and short-term nightly are different products. Short-term versus long-term renting explains the operating difference. For comps, the rule is simpler: do not price a one-year lease off a nightly rate times thirty. Utilities have to match too. If the comp is gross and the tenant pays every bill, and your lease is the same, you are fine. If one rent includes heat and the other does not, the face rents are not comparable until you equalize the utilities.

Use effective rent. One month free on a twelve-month lease means the tenant pays for eleven. A $1,800 face rent with a month free is $1,650 a month across the year. Concessions are common when a building is trying to hold a headline number. Take the concession out before the number enters your set. Date every comp. A lease signed last month beats a lease signed two years ago at a rent that nobody has tested since. Set a window, such as leases started in the past six months, and drop what is older unless you have nothing else. Then say the set is old.

What Is Not a Comp

The national vacancy rate is not a rent. The Census Bureau reported a 7.3 percent rental vacancy rate for the United States in the second quarter of 2026, essentially unchanged from 7.3 percent in the first quarter and not statistically different from 7.0 percent a year earlier, in the Housing Vacancies and Homeownership release. That is a stock figure for the country. It does not tell you what the house on this block leased for. A high national vacancy rate can coexist with a tight street, and the reverse is also true. If you want a market screen of metros, build that screen somewhere else. This page prices one door.

HUD Fair Market Rents are not a listing price either. HUD’s Fair Market Rent documentation defines them as estimates of 40th percentile gross rents for standard-quality units in a metropolitan area or nonmetropolitan county. They set payment standards for vouchers and ceilings for several housing programs. They are gross rents, so they fold in utilities. They are a percentile for a wide geography, not the rent of the three leases closest to your subject. Use an FMR as a sanity check that your conclusion is not in a different world from the assistance rent. Do not use it as the asking rent. Section 8 investing is where payment standards belong.

A gross rent multiplier and a one-percent screen are not comps. A gross rent multiplier divides price by rent. The one percent rule compares rent to price as a filter. Both need a rent you already believe. They do not produce that rent. Running them first and then hunting for comps that justify the rent is backwards.

Asking rents that have sat unrented are advertisements. Include them only as a ceiling that the market is refusing. If three similar houses have asked $2,200 for sixty days and none have leased, your comp is not $2,200. Your information is that $2,200 is too high until somebody accepts it. Prefer closed leases. When you must use actives, label them as actives.

Set the Rent, Then Use It

Gather three to five substitutes. Throw out any you cannot explain. If four cluster between $1,700 and $1,850 effective and one leased at $2,400 because it was fully renovated, the cluster is your set and the renovation is a different house. Average the cluster only after the concessions and the utility mismatch are out. Then move your subject inside the cluster based on condition, not based on the rent you need for the mortgage.

Write the conclusion in one line a skeptical partner can audit. “Three nearby three-bedroom houses, 1,300 to 1,500 square feet, leased in the last four months at $1,750, $1,800, and $1,820 effective, tenant-paid electric. Subject is original condition, so $1,750, not the top of the set.” That line is the comp. A spreadsheet with twenty columns and no addresses is not.

Put that rent into the cash-flow top line as potential rent, then haircut it for vacancy you will actually have. How cash flow treats that rent subtracts vacancy, operating costs, and the full payment. A comp that was your wish, with vacancy at zero, is how a thin deal looks acceptable. If a lender’s rent conclusion is lower than yours, the file will use the lender’s figure for the ratio. Rent-roll requirements are where an in-place lease and a market conclusion meet. An in-place lease above your comps is a tenant you should be glad to have and a renewal you should not underwrite at the old number without a reason. An in-place lease below the comps is not a gift. It is the rent until the lease ends, and the comps are the renewal case.

Revisit the set when you renew. A comp file from the purchase, three years old, is not a renewal analysis. Pull fresh leases. If the street has not moved, the rent does not move just because your taxes did.

Ready to discuss business-purpose financing options for an investment property? Call (907) 841-1600 or use the contact form.

Start an Inquiry →

Frequently Asked Questions

How many leases do I need to price one rental?

Three to five close substitutes are enough for a one-door decision when they actually match. How to run rental property comps means those leases, not a metro report. If you can only find one true comparable, say the evidence is thin and widen the search without pretending a different product is the same house. Quality of match beats a long list of mismatches.

Should I use asking rents or signed leases?

Signed leases, at effective rent after concessions. Asking rents that have not leased show what owners want. They become comps only when a tenant accepts them. A month of free rent belongs in the math as a lower monthly number across the term, not as a footnote under a higher face rent.

Can I use a Fair Market Rent as the market rent?

No. HUD defines Fair Market Rents as 40th percentile gross rents for a metro area or nonmetropolitan county, used for voucher payment standards and other program limits. They are a regional gross-rent estimate, and they already include utilities. Your price comes from nearby leases, with the FMR used only as a cross-check.

Do national vacancy rates set the rent?

No. The Census Bureau’s 7.3 percent rental vacancy rate for the second quarter of 2026 describes the national rental stock, not the rent or the vacancy of one house. Price the door from local leases. Choose vacancy from this unit’s lease calendar when you move the rent into a cash-flow worksheet.

Should short-term nightly rates be averaged with annual leases?

No. They are different products with different services, turnover, and furnished status. Price a one-year unfurnished lease from other one-year unfurnished leases. If you are choosing between operating styles, compare the two businesses after each is priced on its own comps, not by multiplying a nightly rate by thirty and calling it a monthly comp.