What to Know Before Buying Your First Rental Property

Turning the idea of owning a rental property into a reality can feel overwhelming. You’re probably wondering how much you really need for a down payment, how to tell if a property will actually make money, or what to do if you get a bad tenant. These are the right questions to be asking. Success in real estate investing isn’t about luck; it’s about preparation. This guide breaks down what to know before buying a rental property into manageable, actionable steps. We’ll walk you through everything from analyzing a deal to creating a solid lease, giving you the confidence to move forward.

Key Takeaways

• Run the Numbers Before You Fall in Love: A successful rental property is a financial decision, not an emotional one. Calculate the potential cash flow, factor in all costs—including a healthy emergency fund—and analyze the return on investment to ensure the property is profitable on paper before you make an offer.
• Do Your Homework to Avoid Future Headaches: Protect your investment by being thorough upfront. This means getting a professional inspection to uncover hidden physical problems and creating a consistent, fair screening process to find reliable tenants who will care for your property.
• Define the Rules and Your Role as Landlord: A detailed, legally compliant lease is your most important tool for setting clear expectations with tenants. From there, honestly assess your available time and decide if self-managing is realistic or if hiring a property manager is the smarter move for your lifestyle.

What Makes a Great Rental Property?

Finding the right investment property is about more than four walls and a roof. A great rental is a combination of the right location, the right property type, and strong market demand. It’s a property that will attract reliable tenants and generate consistent income for years to come. Before you start scrolling through listings, let’s break down the key ingredients that separate a so-so rental from a truly profitable investment.

Find the Right Location

Location, location, location—it’s a real estate cliché for a reason. The neighborhood you choose has a massive impact on your success. Look for properties in desirable Metro Detroit areas, like those near vibrant downtowns, parks, or major highways that make commuting easy. These spots naturally attract more renters, which means you can often charge higher rent and worry less about long vacancies. A property in a sought-after area is an asset that holds its value and keeps demand high. If you're unsure where to start, our team specializes in investment properties across the region and can point you toward the neighborhoods with the most potential.

Choose the Best Property Type

Next, think about what kind of property fits your goals. Single-family homes are a popular choice and tend to attract long-term renters, often families who want to settle in. On the other hand, condos can be great for beginners. You’ll have less exterior maintenance to worry about since the condo association usually handles things like landscaping and roof repairs. This can make your life much easier, but be sure to factor in the monthly HOA fees. There’s no single right answer—the best choice depends on your budget, how hands-on you want to be, and the type of tenant you hope to attract. Think about the pros and cons of each before making a decision.

Gauge Local Market Demand

You could find the perfect house, but if no one wants to rent in that area, you’re in trouble. Luckily, Metro Detroit has strong rental demand, with a large population of renters keeping the market active. High demand means your property is less likely to sit empty, ensuring a more stable cash flow. Before you buy, do a little research on the specific neighborhood. How many other rentals are on the market? How long do they stay listed? A healthy market has a good balance. Our team keeps a close watch on these trends, so we can help you understand the demand in any area you’re considering. We've built our reputation as local experts for a reason.

Look for Key Neighborhood Amenities

Tenants aren’t just renting a home; they’re choosing a lifestyle. The amenities in a neighborhood can make or break their decision. Things like good schools, low crime rates, and walkability are huge draws. Renters love being close to parks, coffee shops, grocery stores, and restaurants. Think about areas like Ferndale or Royal Oak, where people can walk to get dinner or grab a drink. These features not only attract high-quality tenants but also justify higher rent prices. When you’re evaluating a property, take a drive around the neighborhood at different times of the day to get a real feel for the community. If you have questions about a specific area, reach out to us—we’re happy to share our insights.

What Are the Real Costs of Owning a Rental?

Before you start picturing monthly rent checks hitting your bank account, it’s important to get a clear-eyed view of the total financial commitment. A successful rental property is built on a solid financial foundation, and that means understanding every cost involved—from the day you sign the papers to the day-to-day realities of being a landlord. Thinking through these numbers upfront will help you set a realistic budget, avoid surprises, and ensure your investment is set up for long-term success. Let's break down the real costs you should prepare for.

Calculate Your Upfront Investment

Your first major expense is, of course, purchasing the property itself. Unlike buying your own home, investing in real estate comes with stricter lending requirements. Lenders typically want to see a down payment of at least 20% for an investment property because they view it as a higher-risk loan. You’ll also need a solid financial profile, usually including a credit score of 620 or higher and a debt-to-income ratio that shows you can comfortably handle another mortgage. Beyond the down payment, you’ll also need cash for closing costs, which can include appraisal fees, loan origination fees, title insurance, and attorney fees.

Account for Ongoing Monthly Expenses

Once you own the property, your expenses don't stop. The key to a profitable rental is ensuring the rent you charge covers all your recurring costs with room to spare. The most obvious expense is your monthly mortgage payment (principal and interest), but there’s more to it. You’ll also have to pay property taxes and homeowners insurance, which are often bundled with your mortgage. On top of that, you need to budget for routine maintenance, potential HOA fees, and utilities that may not be covered by the tenant. These ongoing expenses are the baseline you must cover each month, whether the property is occupied or not.

Uncover and Budget for Hidden Costs

Every experienced landlord will tell you to expect the unexpected. Things break, tenants move out, and miscellaneous costs always seem to appear. That’s why it’s smart to build a buffer into your budget for these "hidden" expenses. A good rule of thumb is to add an extra 5-10% to your estimated monthly costs to cover things like a vacant month between tenants, marketing costs to find a new renter, or minor repairs like a leaky faucet or a broken appliance. Factoring in these potential costs from the start prevents them from derailing your budget and turning your investment into a financial strain.

Plan Your Emergency Fund

Separate from your monthly buffer, you need a dedicated emergency fund for major, unforeseen expenses. This isn't for small repairs; it's for the big-ticket items that can pop up without warning, like a furnace dying in the middle of winter or a roof needing a complete replacement after a storm. Having a healthy cash reserve—many experts recommend setting aside at least three to six months' worth of operating expenses—ensures you can handle these large costs without going into debt or scrambling for funds. This financial safety net protects your investment and gives you peace of mind. If you're mapping out these costs for a property in Metro Detroit, our team can help you run the numbers.

How Can You Finance a Rental Property?

Securing a loan for an investment property is a different ballgame than financing your primary home. Lenders view it as a business transaction, which means they have stricter requirements to minimize their risk. But don’t let that intimidate you. With the right preparation and a clear understanding of your options, you can find the financing that fits your strategy. The key is to know what lenders are looking for and how to position yourself as a reliable borrower.

Understand Traditional Mortgages

A traditional mortgage is one of the most common ways to finance a rental, but the terms will be different from the loan on your own home. Because investment properties carry more risk for lenders, they tighten the requirements. You should expect to pay a larger down payment, typically between 20% and 30%, plus closing costs. Interest rates on investment property loans also tend to be slightly higher. Lenders want to see that you have significant skin in the game and are financially stable enough to handle the responsibilities of being a landlord without relying solely on rental income.

Know Your Investment Loan Options

When you apply for an investment loan, lenders will look closely at your financial health. Generally, they ask for a down payment of at least 20%. You'll also likely need a credit score of at least 620, and your total debts shouldn't be more than 45% of your income. While these are good benchmarks, different lenders have different programs. Working with a real estate team that specializes in investment properties can be a huge advantage, as we can connect you with trusted local lenders who understand the Metro Detroit market and can guide you to the right loan product for your goals.

Strategize Your Down Payment

Your down payment is often the biggest financial hurdle to overcome. It’s essential to make sure you can truly afford all the costs involved before buying a rental property, not just the down payment itself. This means having enough cash to cover closing costs, immediate repairs, and a separate emergency fund for unexpected vacancies or maintenance issues down the road. Avoid the temptation to drain your entire savings account for the down payment. A well-planned financial strategy ensures your investment starts on solid ground and can weather any storms that come its way.

How Do You Analyze a Property's Profit Potential?

Buying a rental property is more than just a purchase; it's a business decision. To make a smart one, you need to look past the curb appeal and run the numbers. Analyzing a property's profit potential isn't about guesswork—it's about using a few key calculations to see if the investment makes financial sense. Before you get emotionally attached to a property, it’s essential to understand its potential cash flow, return on investment (ROI), and break-even point. These metrics will give you a clear picture of the property's financial health and help you decide if it aligns with your goals. By grounding your decision in solid data, you can move forward with confidence, knowing you're making a sound investment in your future.

Calculate Your Potential Cash Flow

Cash flow is the money left in your pocket each month after you’ve collected rent and paid all the bills. To figure this out, you need to know if the rent you can charge will cover all your expenses, including the mortgage, property taxes, insurance, and repairs. Start with the potential gross rental income and subtract all your anticipated operating costs. Be realistic here—factor in not just the obvious expenses but also a budget for vacancies (typically 5-10% of the rent) and ongoing maintenance. A positive cash flow means you’re making money each month, while a negative cash flow means you’re paying out of pocket to maintain the investment. Our team can help you analyze potential properties to ensure your numbers add up.

Measure Your Return on Investment (ROI)

Your Return on Investment, or ROI, tells you how hard your money is working for you. It measures the profitability of your investment relative to the amount of cash you put into it. In simple terms, you calculate your annual net profit (your cash flow over 12 months) and divide it by your total cash investment, which includes your down payment and closing costs. A higher ROI indicates a more efficient investment. If your rent covers all your costs and your tenants pay on time, you could start seeing a healthy return right away. Comparing the potential ROI of different properties can help you decide which one offers the best financial opportunity.

Run a Break-Even Analysis

A break-even analysis helps you identify the point where your rental income exactly covers your total expenses. This is your financial safety net. Knowing this number tells you how much of a hit you can take—whether from a month of vacancy or an unexpected repair—before you start losing money. It’s a crucial calculation for managing risk. Before you invest, it's important to be honest with yourself about whether you can handle the financial and emotional stress of managing a property. Understanding your break-even point provides peace of mind and helps you create a budget that can withstand the inevitable ups and downs of being a landlord.

Factor in Metro Detroit Market Trends

Numbers on a spreadsheet are only part of the story; you also need to understand the local market. The Metro Detroit region has historically shown strong rental demand, partly because of its large population of renters. This creates a healthy pool of potential tenants for your property. Furthermore, the area’s price-to-rent ratio often presents a favorable environment for rental property investors. Understanding these trends is key to making an informed decision. As local experts, we keep a close watch on the market and can help you find properties in neighborhoods with the greatest potential for success. When you're ready to start your search, we can provide the insights you need.

What Due Diligence Is Required Before You Buy?

Once you’ve found a promising property, it’s time to do your homework. This is the due diligence phase, and it’s arguably the most critical step in the entire process. It’s where you verify the assumptions you made during your initial analysis and uncover any potential issues before you sign on the dotted line. Taking the time to be thorough here protects your investment and sets you up for long-term success as a landlord. Think of it as your final check to ensure the property is as good as it looks on paper.

Get a Professional Property Inspection

Never, ever skip the professional property inspection. Even if a property looks perfect, a trained inspector can spot hidden problems with the foundation, roof, plumbing, or electrical systems that could cost you thousands down the road. For a rental property, this step is even more important because you are responsible for providing a safe and habitable home for your tenants. An inspection report gives you a clear picture of the property's condition and can be a powerful tool for negotiating repairs or a lower price with the seller. It’s a small upfront cost that can save you from a massive financial headache.

Analyze the Financial Records

It’s time to get serious about the numbers. If the property is already a rental, ask the seller for current lease agreements, maintenance records, and a history of utility and property tax bills. Your goal is to verify their claimed income and expenses. You need to be confident that the rent you can realistically charge will cover all your costs—including the mortgage, taxes, insurance, and repairs. If you’re converting a single-family home into a rental, you’ll need to project these costs yourself. A thorough financial review ensures your investment property will actually generate positive cash flow.

Check for Legal Compliance

Understanding your legal obligations as a landlord is non-negotiable. Every city and state has specific landlord-tenant laws, and Metro Detroit is no exception. You’ll need to get familiar with regulations regarding security deposits, tenant screening, eviction procedures, and property maintenance standards. For example, you must typically provide tenants with reasonable notice before entering the property, except in an emergency. Ensuring the property meets all local safety codes and that your lease agreement is legally sound will protect you from potential disputes and lawsuits. It’s always a good idea to get expert advice on local requirements.

Research the Market and Comps

A deep dive into the local market validates your investment strategy. The good news is that Metro Detroit has a strong rental demand, with a large population of renters. Your job is to confirm that this specific neighborhood aligns with your goals. Look at comparable properties, or "comps," that have recently rented or sold nearby. This data helps you confirm you’re paying a fair price and allows you to set a competitive rental rate. Analyzing local trends, vacancy rates, and neighborhood developments will give you the confidence that you’re buying a home in an area with lasting appeal.

What Risks Should You Prepare For?

Investing in real estate is an exciting step, but it’s not without its challenges. The key to long-term success isn’t avoiding risks altogether—that’s impossible—but knowing what they are and having a solid plan to handle them when they pop up. Thinking through potential issues ahead of time protects your investment and saves you from stressful, last-minute decisions. From budgeting for unexpected repairs to understanding the local market, being prepared is your best strategy.

When you’re ready to take the next step, our team has deep experience helping new investors find properties in Metro Detroit that align with their financial goals. We can help you assess the potential of a property and understand the specific risks involved, so you can move forward with confidence. Let’s walk through some of the most common hurdles you should prepare for as a new landlord.

Avoid Common Financial Pitfalls

It’s easy to get caught up in the potential monthly income, but a successful rental property is built on realistic financial planning. Before you even make an offer, you need to be certain that the rent you can realistically charge will cover all your expenses—not just the mortgage. This includes property taxes, insurance, HOA fees, and a budget for repairs. A smart rule of thumb is to overestimate your costs and underestimate your income. This conservative approach creates a financial cushion, ensuring that a month of vacancy or an unexpected repair doesn't derail your investment. Think of it as a financial stress test for your property.

Prepare for Tenant-Related Challenges

Your tenants are the engine of your rental business, which is why finding the right ones is so important. A great tenant pays on time, takes care of the property, and communicates clearly. A challenging one can lead to late payments, property damage, and even costly evictions. The best way to protect yourself is to establish a thorough and consistent screening process. Learning to spot red flags during tenant screening is a fundamental skill for any landlord. This means running background and credit checks, verifying income, and checking references for every single applicant, every single time.

Anticipate Property Maintenance Issues

Every homeowner knows that things eventually break, and rental properties are no exception. From a leaking faucet to a furnace that quits in the middle of winter, you are responsible for handling repairs promptly. That’s why you need a dedicated savings fund for maintenance and unexpected costs before you even buy the property. Many experts recommend setting aside 1% of the property’s value annually for maintenance. You can also get ahead of major issues by proactively checking on the home’s essential systems, like the HVAC, plumbing, and roof. A little preventative care can save you from much larger and more expensive problems down the road.

Understand Market Volatility

The real estate market is always changing, and what works today might not work tomorrow. Factors like job growth, population shifts, and new developments can all impact rental demand and property values in Metro Detroit. While you can't control the market, you can stay informed. Researching local vacancy rates is a great start—areas with fewer empty homes often allow landlords to charge higher rents. Understanding the local market trends is crucial for making a smart purchase. Working with a real estate team that has its finger on the pulse of the community gives you a significant advantage in making an investment that will pay off for years to come.

How Do You Find and Screen Great Tenants?

Finding the right property is half the battle; the right tenant makes your investment a success. A great tenant pays on time, cares for your property, and makes being a landlord easier. That’s why a thorough screening process is non-negotiable. It’s your first line of defense in protecting your asset and ensuring a steady return on your real estate investment.

Follow Tenant Screening Best Practices

A solid screening process helps you make informed decisions. Start with a standard rental application that gathers all the necessary information, then run a credit and background check on every qualified applicant. Recognizing red flags like employment irregularities, significant credit issues, and a spotty rental history is a cornerstone of responsible property management. It's crucial to establish your criteria beforehand—like a minimum credit score or income level—and apply it consistently to every applicant. This not only helps you find the best fit but also ensures you comply with the Fair Housing Act and treat everyone fairly.

Watch for Red Flags During Screening

Details matter. If a prospective tenant arrives late for a showing, that's a red flag for reliability. Other warning signs include vague answers on their application, pushiness about skipping the screening process, or badmouthing every previous landlord. While you must follow fair housing laws, you can also trust your gut when something feels off. These small signs can point to bigger issues later, like late rent payments or disputes. Paying attention during your interactions can save you a lot of headaches down the road.

Verify Your Applicant's Income

Consistent rent is critical, so confirming an applicant's ability to pay is a must. Unverifiable income is a significant red flag. A good rule of thumb is to look for a monthly income that is at least three times the rent. Ask for recent pay stubs or bank statements, and don't just take their word for it. Call the employer listed on the application to confirm their employment status and income. This simple step helps ensure you have a reliable tenant who won't struggle to make payments each month.

Check References Thoroughly

References from previous landlords offer a real-world look at an applicant's rental history. Always check them to avoid future problems. When you call, ask specific questions: Did they pay rent on time? Did they maintain the property? Were there any complaints from neighbors? Did they give proper notice before leaving? The most important question is, "Would you rent to them again?" A hesitant answer can tell you everything you need to know. This step provides invaluable insight into what you can expect from the applicant as a tenant.

How Do You Create a Solid Lease Agreement?

Your lease agreement is the single most important document you'll have as a landlord. Think of it as the foundation of your relationship with your tenant—it sets clear expectations, defines responsibilities, and protects both you and your investment. A handshake and a promise won't cut it when a pipe bursts at 2 a.m. or the rent is late. A vague or poorly written lease can lead to misunderstandings, disputes, and costly legal headaches down the road.

Taking the time to create a detailed, legally sound lease is one of the smartest things you can do as a new landlord. It’s your roadmap for the entire tenancy, outlining everything from when rent is due to how maintenance requests are handled. When everyone knows the rules from day one, you create a more professional and harmonious living situation for your tenants and a more secure investment for yourself.

Include Essential Clauses for Protection

A solid lease is built on specific, clear clauses that cover all the bases. These aren't just legal jargon; they are the rules of the road for your property. Start with the basics: the names of all adult tenants, the property address, and the lease term, including specific start and end dates. Clearly state the rent amount, the due date, and any grace periods or late fees. You’ll also want to detail the security deposit amount and the conditions for its return.

Beyond that, include clauses that address your specific property rules. Do you allow pets? If so, what are the restrictions and is there a pet fee? What is your policy on smoking, guests, or making alterations to the property? Including these essential clauses leaves no room for interpretation and helps prevent future conflicts.

Define Landlord and Tenant Responsibilities

"Who takes care of that?" is a question you never want to leave unanswered. Your lease should clearly spell out the responsibilities for both you and your tenant to avoid confusion and disputes. This section should cover everything from routine maintenance to emergency repairs. For example, specify who is responsible for lawn care, snow removal, and changing lightbulbs.

Outline the process for how tenants should report maintenance issues and your expected response time. It’s also crucial to define who pays for which utilities—water, gas, electricity, trash, and internet. By putting these details in writing, you establish clear boundaries and ensure the property is well-maintained. When everyone understands their obligations, it fosters a sense of mutual respect and accountability.

Outline Termination and Dispute Policies

While you hope for a smooth tenancy, it’s wise to prepare for every scenario. Your lease agreement needs a clear section on termination and dispute resolution. Specify the amount of notice required if a tenant decides not to renew their lease. More importantly, outline the exact conditions under which the lease can be terminated early by either party, and what penalties, if any, apply. This is often referred to as a break-lease clause.

This section should also include the steps to take if a dispute arises. This could be a simple process for formal communication or a requirement for mediation before legal action. Having these policies clearly documented provides a straightforward path to follow if things go wrong, which can often de-escalate a situation and help you and your tenant find a resolution without ending up in court.

Ensure Your Lease is Legally Compliant

A lease is a legally binding contract, and it must adhere to all federal, state, and local laws. Rental laws can be complex and vary significantly, so what’s standard in one area might not be compliant in Metro Detroit. Using a generic online template can be risky, as it may not include protections or clauses required by Michigan's landlord-tenant laws. An unenforceable clause can void parts of your lease or, in some cases, the entire agreement.

To protect yourself and your investment, it’s essential to ensure your lease is fully compliant. We always recommend having your lease agreement reviewed by a qualified attorney who specializes in real estate. As you navigate your first investment, our team at Jim Shaffer And Associates can connect you with trusted legal professionals in the area to ensure your paperwork is buttoned up and ready to go.

Should You Self-Manage or Hire a Pro?

Once you’ve closed on your first rental property, you’ll face a big decision: will you manage it yourself or hire a property management company? There’s no single right answer, as it really comes down to your budget, how much time you have, and how hands-on you want to be. Some investors love the control and cost savings of doing it themselves, while others prefer the passive income that comes with handing the keys to a professional.

This decision directly impacts your day-to-day life as a landlord and your property's profitability. Let's walk through the key factors to consider so you can figure out the best path for your real estate investment journey.

Weigh the Pros and Cons of Self-Management

Going the DIY route can be incredibly rewarding. You have complete control over your property, from choosing tenants to deciding on repairs. You also save on management fees, which means more of the rental income goes directly into your pocket. However, managing a property is a serious time commitment. It means answering late-night calls about a broken water heater, marketing the property, screening applicants, and handling any issues that arise. As some investors say, it can be easy enough to do yourself with a good handyman, but you have to be prepared to be the go-to person for everything. Think of it as taking on a part-time job—one that requires you to be organized, responsive, and knowledgeable about landlord-tenant laws.

Consider a Property Management Company

If the idea of fielding maintenance calls and chasing down rent payments sounds like a nightmare, a property management company might be your best friend. These firms handle the daily operations for you, including finding and screening tenants, collecting rent, coordinating repairs, and even managing evictions if necessary. This is an ideal option if you don't live near your rental property or if you want your investment to be as passive as possible. The trade-off is the cost. Property management firms typically charge 8% to 12% of the gross rental income. While this fee reduces your monthly cash flow, the peace of mind and freedom it provides can be well worth it.

Compare Costs to Make Your Decision

The choice between self-management and hiring a pro often comes down to the numbers. Start by calculating the potential management fee and subtracting it from your expected rental income. Does the property still generate positive cash flow? Next, consider the value of your own time. How many hours a month do you anticipate spending on landlord duties, and what is that time worth to you? Don’t forget to factor in maintenance. Whether you self-manage or not, you need to have enough money saved up to cover property maintenance and unexpected costs. A good property manager often has a network of reliable contractors and may even get discounted rates, which can offset some of their fees over time.

Find the Right Fit in Metro Detroit

The Metro Detroit market has unique characteristics that can influence your decision. The region has a strong rental demand, with a large population of renters making up nearly 41% of households. This is great for keeping your property occupied, but it also means you’ll have more applicants to screen and potentially more turnover to manage. A local property manager who understands the nuances of neighborhoods from Royal Oak to Troy can be a huge asset. If you decide to hire a pro, it’s crucial to find a reputable company. Our team has deep connections in the Metro Detroit community, and we’re always happy to offer recommendations to help you protect your investment.

Related Articles

• How to Buy Rental Property: A Step-by-Step Guide — Jim Shaffer And Associates
• 9 Examples of Investment Property: A Guide

Frequently Asked Questions

How much money do I really need to get started with my first rental property? Beyond the list price, you should plan for a down payment of at least 20%, plus another 2-5% of the purchase price for closing costs. On top of that, it's smart to have a separate cash reserve. This fund should cover a few months of mortgage payments in case of a vacancy and have enough set aside for any immediate repairs or updates the property might need before a tenant can move in.

Is a single-family home or a condo a better first investment? There are great arguments for both, and the right choice depends on how hands-on you want to be. A single-family home often attracts long-term tenants and gives you full control over the property. However, you're responsible for all maintenance, from the roof to the lawn. A condo can be simpler because the association handles exterior maintenance, but you'll pay a monthly HOA fee that eats into your profit, and you'll have to follow their rules.

What's the single biggest mistake most new landlords make? The most common misstep is underestimating the true costs and overestimating the profits. New investors often get excited about the potential monthly rent check and forget to budget for vacancies, unexpected repairs, and routine maintenance. A successful investment is built on realistic numbers, so it's crucial to run a thorough analysis and build a healthy cash reserve before you even make an offer.

Can I realistically manage a rental property myself if I already have a full-time job? Absolutely, but it requires organization and a willingness to treat it like a part-time job. You'll need to be available to respond to tenant needs, coordinate with repair professionals, and handle administrative tasks. If you live close to the property and have a flexible schedule, self-management can save you money. If your job is demanding or you value your free time, hiring a property manager might be the better choice for your sanity.

Besides looking at school ratings, how do I know if a neighborhood is a good place to invest? Look for signs of a stable and growing community. Drive through the area at different times to check for well-kept homes, active parks, and local businesses that seem to be thriving. Proximity to major employers, public transit, and highways is a huge plus for attracting tenants. We also look at local vacancy rates and the average time rentals stay on the market—these numbers give you a clear picture of the area's demand.