When starting in real estate investing, you might find rent estimate tools helpful. Can you count on the Zillow estimate rent tool, though?
Using Zillow Estimate Rent Tool for Operating Expenses
In case you’re ready to purchase your rental investment property, regardless of whether you’re an amateur or expert real estate investor, it’s important to proceed with a detailed analysis. Essentially, this will provide you with valuable insight into whether the real estate deal is worth it or not.
The crucial part of the said analysis involves the operating expenses of the property in question. These include expenses such as insurance and maintenance, property taxes and management fees, lawn care, HOA fees, and basically all other costs apart from the mortgage.
With a proper estimate in place, you’ll be able to proceed with confidence. And to make this analysis as efficient and painless as possible, available rent estimators and rental income calculators can be rather useful, starting with the Zillow estimate rent tool.
Zillow Rent Estimate Calculator
Zillow has been a rather established brand in the real estate market for a while now. One of the main ways the brand brings value to its audience is via the Zillow rent estimate tool, called Rent Zestimate. Essentially, the whole point of the tool is to calculate the worth of a certain property based on the public market data and property comparison.
The Zillow estimate rent tool was first launched in 2011 and at the time, it contained 90 million houses worth of data in the US. Now, that number has increased to over 100 million properties in the country.
How Does Zillow Determine Its Rent Estimate?
To put it simply, the Zillow estimate rent functions as an automated home valuation tool. It relies on user-submitted data and other public information available from the listings. That way, those who rent estimate Zillow can gain valuable insight into the relevant info about the market and location of the property as well as the property itself.
In order to come up with a property value estimate, the Zillow estimate rent tool uses an algorithm that gathers available data from MLS and brokers. For instance, the tool will include data such as the number of bedrooms and bathrooms, square footage of the property, its location, tax assessment, previous sales records, comparable prices, etc.
Does Zillow Rent Estimate Include Utilities?
Utilities should definitely not be ignored when looking for the best rental property investment on the market. After all, the utility fees can easily cut into your income if you’re not careful. Most landlords decide to deal with utilities by adding the said fee to the monthly rent or by charging a separate fixed fee for the utilities.
This can be a double-edged sword if the renters end up being too lax with their electricity and water usage, for example. The price you add to the rent or as a fee may not cover the actual costs once the tenants move in.
A good way to solve this is to shift the responsibility of paying utilities entirely to the tenant so that the bills are in their name. Zillow also provides a Rental Manager tool that can make rent collections easier for landlords.
However, it’s important to note that using the Zillow estimate rent tool is far from ideal in terms of calculating the potential utility fees. There’s a lot of data that can be extracted that can then help determine the rental rate, but whether that will actually cover the bills remains to be seen.
In general, the best you can do is go by the average utility fees for that particular neighborhood area and hope that the tenants won’t step over it in case you decide against putting the bills in their name.
How to Use the Rent Zestimate
It’s rather simple to use the Zillow estimate rent tool. All one has to do is create a free account on its website and log in. Keep in mind that it would be preferable to use your real name when creating the account. This is due to the fact that Zillow also performs identity verifications.
To compare the property you wish to sell/rent to similar houses in the area, you should just type the address of the said property. This can come in handy when trying to determine its current market value.
What’s more, you can also use the Zillow estimate rent tool to get information on potential improvements and changes you can make. By checking the ones that sold successfully, you can learn which one fares well in the market at the moment. That way, you can advertise your own property in a more appealing manner.
If you wish to sell your property or rent it out but do not desire to start marketing your home right away, you can use the “Make Me Move” feature. With this feature, potential buyers can place their property offers, but the owner can decide whether to reject or consider them. In a way, this allows for an interest check before the actual sale.
What’s more, the Zillow estimate rent tool is not only useful for sellers but also for buyers. Namely, interested buyers can check for the home availability in specific locations.
When searching for the best investment property deal, real estate investors can utilize Zestimate to analyze whether the property prices match their budget and goals. They will also get info on tax rates to further gain insight into just how lucrative the property in question is.
Is Zillow Rent Estimate Accurate?
An accurate analysis in regard to property valuation is extremely important for making a successful investment decision. In that sense, it’s certainly useful to make the most out of a tool like Zestimate, but it has to be noted that its accuracy is not above and beyond.
Actually, Zillow’s main economist and analytics officer, Stan Humphries, called the Zillow estimate rent tool only a “starting point” when property evaluation is concerned. Of course, it’s an undeniable truth that the algorithm simply can’t have all the knowledge about a specific property. In the end, it’s always the homeowner’s responsibility to provide as much accurate and updated info about the property as possible. Therefore, Zillow makes it possible to edit property info as necessary.
That said, if the homeowners fail to update information about their properties regularly, Zillow’s estimations may prove to be outdated as well.
Mashvisor to the Rescue
No real estate investor should rely solely on an estimating tool like Zillow. While Zestimate truly provides a great starting point for the eval, it’s still crucial to back it up with expert info and comparative market analysis.
Mashvisor can solve this issue and make the life of real estate investors considerably easier. Thanks to Mashvisor’s real estate agent directory, heat map, and investment property calculator, investors can make an informed decision about expanding their portfolio.
Real Estate Agent Directory
If you wish to be a successful real estate investor, you have to forget about doing everything on your own. In order to close the best deal possible, you simply have to work with other people. It’s joint teamwork that will make all the difference. This doesn’t only include the work put in by the seller and buyer, but also other legal professionals, especially renowned real estate agents.
Essentially, if your goal is to secure deals that fit your investment goals, it’s pretty much necessary to work with local real estate agents. They will have the knowledge of the market and current values, which is an absolute must when looking to buy an investment property with an adequate return on investment.
With Mashvisor’s extensive directory of real estate agents located in every US county, real estate investors can fully make the most out of the market opportunities, especially when it comes to investors looking to buy in another country or city.
When you subscribe to Mashvisor, you also gain access to the comprehensive list of real estate agent professionals. Forming a partnership with a local and reputable agent instantly boosts your chances of choosing the best investment property for your needs and goals.
Real Estate Heatmap
Location is one of the most important factors when it comes to property value. This is precisely why Mashvisor offers a heatmap feature that points to the hottest neighborhoods of a real estate market.
Not only does the heat map work like a tool for popular markets, but users can also segment their search by the affordability of available properties as well as the level of rental income. With Mashvisor’s rental property calculator, you can instantly gain insight into the most important numbers that determine property value.
Furthermore, Mashvisor’s heat map tool is rather easy to use as it shows the profitability of a specific market in colors; red means to avoid and green to go for it. There are several different filters that users can set up, from rental income and listing prices to Airbnb occupancy rate and ROI.
In terms of ROI, the heat map will provide info about the cash-on-cash return, cap rate, as well as cash flow. For most investors, the big metric to consider is a cash-on-cash return. This is essentially the amount you get when you divide annual net operating income (NOI) by your cash investment in the same period.
You can expect to see green in areas on the heat map that are determined to have the best cash-on-cash return rates. It’s a foolproof way to find the best place to buy rental property in regard to your budget and expectations.
Don’t ignore the value of the Airbnb occupancy rate filter though, especially if you’re interested in short-term rentals. With this particular filter in place, you can easily determine which locations are the most popular vacation spots and which ones are a definite no-go.
Basically, the Airbnb occupancy rate shows just how often people tend to book a certain property in a month. Of course, the higher this number is, the more frequent the bookings are. Your goal should obviously be to get more bookings, as this provides a heftier Airbnb income.
Investment Property Calculator
Finally, you can also count on Mashvisor when it comes to the most reliable investment property calculator. Investors can quickly perform an entire analysis of the investment property. Also, you can use the tool to search the properties under specific criteria as well as get the most accurate metrics that can determine whether the property is worth the deal or not. That said, this calculator is truly an indispensable tool in your BRRRR strategy arsenal.
The calculator works by sifting through the most recent neighborhood data. This guides investors to the best locations. Once that bit is done, the calculator continues to work its magic by allowing the investors to further analyze other important metrics. As mentioned, these include rental income and expenses, cap rate, cash flow, and so on. Based on the results of the analysis, the calculator will also suggest the most effective rental strategy.
There’s no doubt that Zillow is a rather comprehensive and useful website in the real estate world. Using the Zillow estimate rent tool can be a great starting point when doing property analysis. However, it’s not enough to make an informed decision and perform a thorough investment property analysis. Fortunately, the available alternatives can provide the much-needed informational backup.
At Mashvisor, users can easily search through properties across the entire US and, at the same time, analyze the important market data in regards to all of the country’s markets. In that respect, Mashvisor is a worthy ally to have by your side as you venture into the world of real estate investing.
We invite you to give Mashvisor’s 7-day free trial a go to see the benefits of our investment tools first-hand, with no obligations on your part. And you will get a lifelong 15% discount on your plan should you decide to stay subscribed.