September 21, 2022
10 Signs of a Bad Contractor & Tips on Finding a Great One
Choosing an unprofessional contractor can cost you headaches, unnecessary time, and wasted money. Avoid these inconveniences by recognizing signs of a bad contractor, including overpromising, asking for cash or full payment, unfamiliarity with permits and requirements, or simply being unresponsive. Find a trustworthy and reliable contractor who completes projects to your standards by asking the right questions and doing your due diligence before starting any work or making payments. Hiring the right contractor is vital for any homeowner or investor, whether you are developing a brand-new home or making minor tweaks to a rental property. Here are 10 signs you hired a bad contractor, how to avoid getting ripped off in these situations, and tips for finding a great contractor: 1. Making Extreme Promises Contractors who don’t perform their own due diligence and make extreme promises to get a job is a red flag. Since a contractor is meant to oversee the entire project, they should also want to know the minor details like budget, specifications, and timelines to get the right resources involved. Although most contractors wear multiple hats, part of their role is to outsource some of the work to subcontractors, source partners for materials, and make sure they have the right equipment for the job. If they don't touch on any of this during your conversations and continuously promise you they’re the best, it’s better to move on to the next contractor. How to Avoid Make sure the contract includes the scope of work that is agreed upon, like a timeline for completion. Ask to have the contract include a clause that if they're not complying with the timeline or within the budget, then you receive compensation or a refund of the deposit made. Make sure to ask the prospective contractor detailed questions. If they are unable to answer or address your concerns to your liking, then you’ll need to get additional estimates on the project. Plus, it’s a best practice to contact two or more contractors for any job. When you find a contractor you like and can trust, platforms like are a project management solution that can help you track your construction projects. It even allows you to enter and prefer vendors like your contractor for any new and upcoming work. It also provides portals for easy communication between you and your tenants and contractors. 2. They’re Unfamiliar With Required Permits Many municipalities require permits for renovations involving plumbing, electrical, and demolition. These permits are required for personal and public safety reasons. If a contractor lies about permit requirements, is unwilling to obtain a permit, or is unfamiliar with the requirements, these may cause bigger issues down the road. Circumventing permit protocols could result in a large fine from your city. It could stop the renovation project altogether, void your homeowner's insurance, and can have issues selling the property at a later date. If your contractor didn't pull a permit, you are the one required to pay the bill. How to Avoid You can ask your contractor to include the costs of the permits in their bids. This way, you’ll know if they have the knowledge of which ones they’ll need, along with pricing. Check your state's Department of Building yourself to see which permits you will need to fulfill your project. If this doesn't match the information on the bids you receive, those are signs of a bad contractor. 3. Asking for Payments in Cash Payment in cash is not illegal. However, homeowners and investors should be wary when a contractor asks for payment in cash, especially for a large bill. This is especially true if they ask for payment upfront before doing any of the job. One of the reasons a contractor may want a cash payment is to avoid taxes or they may be an unlicensed contractor. Some contractors may even offer discounts for cash payment, only for you to find out after final payment that they covered up a botched renovation project. How to Avoid Decide if you want to work with a contractor who has an off-the-books reputation. If you still want to proceed with payment in cash, ensure the payment amount and payment terms are clearly outlined in a contract containing valid contact information. Add a stipulation that you can get in touch with them after project completion for any reason. Before paying any final amount, make sure you do an extensive walk-through of the project and get a paid-in-full receipt from the contractor. 4. They're Not Responsive When You Contact Them Contractors who are typically unresponsive will be unresponsive from the start. If you’re in the request for proposal stage and they take a while to get back to you regarding scheduling a walk-through or taking a long time to get you the actual quote, then that is a sign of an unresponsive contractor. Their responsiveness will not change after you sign a contract. An unresponsive contractor is especially frustrating after you’ve signed the contract, paid a deposit, and yet they're still unresponsive to providing status updates or don't show up for periods of time to complete the work. Sometimes they’ll show back up when they need additional funds. Unfortunately, there is no way of forcing a contractor to return, even with a binding contract. How to Avoid Take some time to do your research on the contractor. Ask for referrals and check to see if there are any complaints on the Better Business Bureau website. Additionally, ask your contractor for the information on their suppliers to use as reference checks and to see if they pay their bills on time. Contractors who don't pay their suppliers on time are usually bad news. If you run into an unresponsive contractor, keep detailed notes on when you tried to contact them and how in case you need it for future litigation. Lastly, avoid agreeing to make any progress payments. Progress payments are an agreement to pay contractors for their work completed throughout the project. Sometimes bad contractors will show up after short periods of unresponsiveness to complete a portion of the work, collect money for what is completed, and then continue this cycle until the next time they need to get paid. 5. They Don't Want to Provide a Written Contract A formal contract speaks to the contractor’s professionalism and knowledge of the industry, and protects both the contractor and the homeowner. They outline in detail the terms of the job, like costs, time frame, job specification, contact information, and license information. Whether the job is big or small, you should expect a contract from any contractor. In some states like New York, it is legally required that licensed contractors provide a contract. How to Avoid Do not pay your contractor any money without a signed contract in place. Make sure you have a copy of the signed agreement by both parties, as contracts are not binding without signatures. You’ll need a contract in place if the contractor fails to complete the project, fails to complete it according to the terms of the contract, takes payment without completing the work, or charges you more than what was expected on the contract. 6. Constantly Changing Their Pricing A good contractor will generally provide an estimate of anticipated costs before finalizing a quote. This should be the best of the contractor's professional assessment of costs, which may include subcontractors, materials, and labor for project completion. Once costs are provided and agreed upon in a contract, there shouldn't be much room for change. If there are some opportunities for price changes, however, they should be accompanied by proper communication and approval with your contractor, so you’re not surprised at the final invoice. This is especially true for any project changes, extra work, or discoveries during the course of the job. If you cannot come to a conclusion or feel the contractor is being dishonest, enlist an attorney's help to negotiate the contract and final payment. How to Avoid Certain steps you can take to make sure you are not being scammed with price inflation is to get an itemized invoice and ask the contractor to explain the charges. The invoice should contain the cost of not only labor, but also subcontractors, materials purchased, and suppliers. This shouldn't be difficult to procure if it’s for a smaller project. Do not remit money to the contractor until you get this information from them. Examine the invoice closely and determine which areas cause the higher invoice. Try to work things out with the contractor and come to a conclusion, especially if the contractor is being honest about expenses and the cost of materials were higher than expected. If you are unable to come to a conclusion or you feel the contractor is being dishonest, enlist an attorney to help negotiate the contract and final payment. 7. Showing Up to the Job Late Many contractors balance a lot of projects at any given time. A professional should understand their workload and won't take on more projects without the capacity. When they’re over the available bandwidth, you’ll notice a bad contractor will start showing up late to the job. When a contractor consistently shows up late, you can assume your final project will also be delayed, which may cost you money in the long run. For example, you may have a longer vacancy period if you were expecting to have renters move in on a certain date. How to Avoid Before you embark on a project, it’s safe to say delays are somewhat inevitable. One way to screen for bad contractors is to call their current list of clients to ask if they show up on time and if their projects are seeing any substantial delays. While you have their clients on the phone, ask about their communication style and quality of work. The right contractor for the job will respect your schedule and keep their commitments to you. 8. Asking for Payment in Full Upfront Other signs of a bad contractor include someone who is asking for payment upfront without a contract or any work completed. This is a huge red flag and you should not continue to work with them. You typically will have some upfront costs. It could be a percentage as a deposit or for materials to begin the project. Good contractors will be willing to negotiate payment and payment terms with you. How to Avoid Double-check with your state laws before making any advance payment, but do not pay your contractor in full upfront. Some states have limitations on how much a contractor can collect for a down payment. For example, contractors in Maryland and Virginia are limited to collecting only 33% of the project’s total cost. In California, deposits are limited to $1,000 or 10% of the total costs. 9. Hesitant on Providing References Researching online reviews on your contractor will only provide so much information. The reviews can be skewed and could be posted by disgruntled clients at no fault of your contractor. Ask for references who have had similar projects as your own to get an idea of what you can expect from your prospective contractor. Some contractors may be hesitant to provide references due to giving personal contact information of their former clients away, or feel that maybe you would somehow be bothering them. How to Avoid Contractors should be extremely proud of their work, so procuring positive references shouldn't be an issue. Signs of a bad contractor is one who is hesitant to give you references, in which case you should ask them why. Explain to them the importance of speaking to references to understand the project timeline, pricing, quality, issues that arose after the fact, and their communication style. Hopefully, this makes the contractor feel more comfortable that you are not infringing on their former clients. If they still refuse to give you references, then let them know that the job is contingent on it. 10. Unable to Provide Proof of Insurance All contractors performing work on residential or commercial spaces should have general liability, automotive, and worker’s compensation insurance. If a contractor does not have insurance and is unable to provide you with proof of certificate, then you could be liable for any damage or injury that occurs during or after the project. Damages can include water damage, fire, or structural issues. Contractors with employees or subcontractors working in the space should have workers’ compensation. This covers any injury caused on the job site. How to Avoid Ask your contractor for a copy of their insurance certificate. You can find out if a contractor lied about insurance by contacting the insurance company listed on the certificate. You also want to confirm that the contractor’s name and information listed under the “Insured” section is the same information listed on the contract. It’s important to understand insurance limits and ensure the limits listed on the certificate are adequate for the job. An insurance limit is the maximum amount an insurance company will pay for a claim that is covered by the insurance policy. Tips for Finding a Great Contractor The ability to find and hire a reliable contractor can make your renovation projects successful. Just because a contractor is licensed or has insurance, doesn't mean the work product and quality would meet your standards. Consider factors like length of work experience, type of past projects, and their overall sense of professionalism during your communication. We’ve identified other useful tips to help you find a good contractor: Ask for referrals from other people you trust: Referrals are the best leads in the real estate industry, and the same applies to finding a contractor. If someone had a great experience, they’re more than willing to recommend a contractor who did excellent work for them. Check their reviews: Do some due diligence on your own. Online reviews are a great place to start, but some states have a Department of Buildings with contractors listed to see their work history. New York, Illinois, and California provide resources to help search contractor records and verify information. Ask for photos of past work: Images are worth a thousand words. If you can visually see the work and are satisfied with the outcome, you can easily assume yours will fall along the same quality. Call their references: If you’re investing a lot of money into a project, this step is worth the effort. It helps you create a whole picture of who you’ll be working with. Get quotes from more than two contractors: You might be surprised at the price range when you get quotes from multiple contractors. Take a close look at the bids so you can compare apples to apples to get the best deal and professional for the project. Don't just care about the bottom line: Expenses are important, especially if you’re in the business of finding homes to flip. However, sometimes you do get what you pay for, so don't always go with the cheapest quote because that might cost you in the long run. Homeowners can free up some time by outsourcing their property management to companies like . Roofstock has trusted property managers across the country willing to help protect your assets. Its experienced property managers can help seek out qualified contractors to help you increase the value of your investment. Bottom Line Dealing with contractors may be the harder part of beginning any renovation work, especially if you’re dealing with projects like flipping homes for a profit when expenses are top of mind. By understanding the signs of a bad contractor, you can feel confident that the person you hire next will be right for the job. With the right person in place, you set yourself up for successful, on-time project completion.
September 21, 2022
6 Best For Sale By Owner (FSBO) Sites in 2023
The best for sale by owner (FSBO) websites for investors offer robust features, such as MLS (multiple listing service) listing syndication and listing management—allowing you to reach a larger audience and increase the exposure of your property listing. In addition, they allow photo uploads, offer nationwide coverage, and have an easy-to-use user interface. Top FSBO sites enable investors to search for and list properties for free, but some sites will cost you anywhere between $95 and $699 to list your property. We analyzed dozens of options to arrive at the six best FSBO sites in 2023 based on their price, monthly site traffic, FSBO listing plans, and features: : Best overall for its closing assistance service for buyers and sellers : Perfect for buyers and sellers seeking high monthly site traffic : Great for its free classified listings : Excellent for its customizable plan for FSBO homesellers : Ideal for homesellers seeking agent assistance services : Best for homesellers looking for multiple FSBO listing packages Best For Sale By Owner Sites at a Glance See fullscreen table × Many For Sale By Owner (FSBO) sites are available to property sellers and buyers to help find and list FSBO properties. Take our quiz to see what the best fit is for you: ForSaleByOwner.com: Best Closing Assistance Service for Buyers & Sellers offers a closing assistance service for buyers and sellers, costing a $495 one-time fee. It provides a Rocket Homes licensed real estate adviser who will walk you through every step of your closing plan and help you with any closing-related legal paperwork. A step-by-step closing plan, title, inspections, and appraisals are also provided to simplify the closing process and ensure that you complete all necessary steps from beginning to end. Additionally, it is available for single-family, condo, townhome, and multifamily property types in 14 states—Alabama, Arizona, Florida, Georgia, Kentucky, Louisiana, Michigan, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, and Virginia. As for homesellers, it's free to advertise your FSBO listing on ForSaleByOwner.com, and the company has a team of experts who will help you create an engaging listing on the ForSaleByOwner.com website. Furthermore, ForSaleByOwner.com allows you to link, feature, and add a video of your property listing on your Facebook and YouTube. As a result, it increases your listing exposure and traffic, which helps in generating leads. Additional ForSaleByOwner.com Features Real estate legal forms: Provides all state-specific forms you need, including offer to purchase real estate, real estate sales contract, seller’s disclosure statement, and lead paint disclosure forms. USA real estate property directory: Offers access to public property records and profiles of real estate nationwide, including the last selling dates of homes for sale and the previous selling prices for those pieces of realty. ForSaleByOwner.com blogs: Provides insights and valuable information like how to boost property value, what home improvements should a property owner invest in, and tips on how to market your property. What’s my home worth calculator: It shows how your property's value and base stats compare to the neighborhood average. This includes home size, sale price, and price per square foot. Security feature: It has a "hidden email address" feature that prevents your email address from being added to bulk mailing lists and enables potential buyers to email you without knowing your email address. ForSaleByOwner.com Customer Feedback Most investors say the high-quality FAQ and support-based blog for first-time homebuyers greatly help gain insights and valuable information about real estate investing. Additionally, the detailed listings, photos, and links of each home help them figure out your credit situation, the cost of moving, and the mortgage rates of the property. Although ForSaleByOwner.com provides a free platform for listing your FSBO home, it does not offer MLS access. Remember that most buyers look for FSBO listings on MLS-syndicated websites, such as Zillow, Redfin, or Realtor.com. Because of this, your pool of buyer leads will be limited, and your home may sell for less than market value. Consider because it offers a flat-fee MLS listing package for $95 that you can customize with a la carte options, such as pro photography, yard signs, lockboxes, and open house kits. Facebook Marketplace: For Buyers & Sellers Seeking High Monthly Site Traffic has the most monthly site traffic (around 1.3 billion), providing FSBO listings with tremendous exposure. Facebook Marketplace allows sellers to list their properties for free and share them with targeted neighborhoods or real estate groups to increase their visibility. Furthermore, Facebook Marketplace allows homesellers to provide useful property information such as the type of housing, price, and the number of bedrooms and bathrooms, all of which help captivate and entice homebuyers to look more at your property. Additionally, if you plan open houses, you can create a public Facebook event to spread the word and make it simple for your contacts to invite their friends. But if you prefer a fixed showing schedule, you can create several months-long events and publish your viewing hours so that people can quickly contact you with questions or schedule a showing. Conversely, Facebook Marketplace is entirely do-it-yourself (DIY), and you won't get assistance with closing, marketing, or photography. If you don't want people viewing your listing and browsing your Facebook profile, ensure your privacy settings are set appropriately before publishing anything to Facebook Marketplace. Additional Facebook Marketplace Features Facebook ads: These are paid messages from businesses or individuals that include advertising objectives, photos, or videos to help reach their target market. Custom bids for items: You can negotiate a price with a seller if they allow custom bid offers on their listings. After you make an offer, the seller can accept or reject it. Report page: Allow users to report any listings that they believe are inappropriate. This helps in tracking scammers and preventing other people from being scammed. Photo uploads: Homesellers can upload up to 50 photos of their property listing, which is more than the MLS. This helps to increase listing exposure and site traffic. Facebook Marketplace Customer Feedback Although there aren't many online reviews, users said it is one of the best websites for FSBO property listing. Your listing will have massive exposure with billions of monthly site traffic. However, Facebook Marketplace is not an FSBO-specific site. You won't find FSBO listing tools to help you sell your property faster. Check out for its classified ad site. It has a real estate-specific section where you can search by location, property type, price, and whether the listing is from the owner or a broker. Craigslist: Best for Free Classified Listings is a popular online classified ad site where many property owners list their homes for sale or rent. There are real estate-specific sections on Craigslist, and users can search by location, property type, price, and whether the listing is from the owner or a broker. The website offers for sale apartments, single-family homes, multifamily properties, commercial properties, and condominiums. Listings must be renewed after 45 days have passed. Owners can include location, which appears on a site map of the listing and uploads multiple photos that help buyers to easily search for potential properties in their preferred location. Additionally, Craigslist enables prospective buyers to get in touch with you directly from the listing via phone call, text, or email. However, remember to remain cautious when responding to messages from users of Craigslist to avoid being scammed. Additional Craigslist Features Products page: Users can see a particular chosen ad. It also shows similar products, chats with a seller on the platform, other sellers’ offers, and the number of users who viewed a specific product. Ad moderation: Allows users to report any listing they find inappropriate. This helps to protect sellers and buyers from malicious content and scammers. Communication: Craigslist users can communicate via encrypted emails for security reasons. Craigslist Customer Feedback has a consumer review rating of 3.41 out of 5 stars from 753 reviews, indicating that most users are delighted with their purchases and listings. Users are happy with the free and straightforward Craigslist interface. You can quickly post some photos and a description of the house. It also enables interested parties to contact you directly from the listing. Nonetheless, Craigslist is notorious for attracting scammers, so keep your guard up against scammers and offers that sound too good to be true. Try for its security features, like the "Hidden Email Address" feature, to protect sellers from unsolicited emails and phone calls. Homecoin: Best Customizable Plans for FSBO Homesellers has a flat-fee MLS listing package priced at $95 that allows you to customize it with its various a la carte options like pro photography, yard signs, lockboxes, and open house kits. If you know what additional features you need, Homecoin can be a fantastic, one-stop DIY FSBO website. Homecoin operates in California, Florida, Georgia, Michigan, Missouri, New York, North Carolina, South Carolina, Tennessee, Virginia, and Wisconsin. It is a user-friendly FSBO that provides sellers with online tools to post and edit their home listings without the help of a real estate agent. In addition, Homecoin offers free real estate comps reports, including comparable sales, market trends, and neighborhood profiles, to help homesellers determine the correct value for their property. Typically, only real estate agents have access to the MLS, but Homecoin allows you to edit your MLS listing and add your home to the MLS directly from your phone whenever you want. Homesellers can edit their MLS listing up to 10 times without additional fees. Additional Homecoin Features Call forwarding and info by text: Enable calls to be sent to you instantly, property info by text 24/7, and provide custom messages. Automatic email forwarding: Allows you to instantly receive email leads and offers, text notifications on emails, and view all emails in one place. Free open house kit: Includes booties, a guest registry, a flyer stand, and tenant cards to help you professionally host an open house and easily follow up with prospective homebuyers. Free real estate sign: A pro installs the sign in 24 to 48 hours. It is 24x30-inches and made of high-quality, 24-gauge powder-coated steel. It includes a phone number and a QR code, allowing potential buyers to view property photos and contact the seller instantly. Homecoin Customer Feedback users are satisfied with the a la carte options like yard signs and open house kits to add to their plans. They say that the customizable programs help them tailor their plans according to their needs to boost their listings and sell them faster. With that, Homecoin garnered a customer review rating of 5 out of 5. But despite all the good remarks, Homecoin received a backlash for its hidden fees. Homecoin charges undisclosed fees at the time of closing the FSBO transaction. The hidden costs can be anywhere from $450 to $2,999. If you want an FSBO site without hidden fees, explore . You can choose its free plan or subscribe to its closing assistance plan, which costs $495 (one-time fee). Unreal Estate: Best for Agent Assistance Services , formerly USRealty.com, provides a premium agent concierge package with access to a licensed broker and a team of expert real estate professionals from your state. For a one-time fee of $699, they will support and guide you through the entire process of selling your home. This package also includes seven days per week chat, email, and phone access to the Penny Willhite team to help you answer your questions, provide guidance, and assist you from your first offer to closing. Also, the MLS data home pricing report, photos of your home by a professional photographer, and a lockbox are provided to assist homesellers in conveniently showing prospective buyers their homes when they are away. Furthermore, with Unreal Estate’s MLS Listing Package, your home will be promoted on your local MLS and syndicated to nearly every real estate platform for 12 months, including Zillow, Trulia, Realtor.com, Redfin, Compass, RE/MAX, and more than 720 national and regional websites. Aside from this, you will be provided unlimited listing edits, the maximum number of photos allowed by your MLS, a traditional "For Sale" yard sign (optional), and forms for sales agreements. Additional Unreal Estate Features Customer support: Its support team has 11 languages, and its platform can be used in any language. Cancel anytime: The monthly subscription plan can be canceled at any time with one month's notice. The annual subscription is paid in one installment in advance. At the end of the year, the customer can choose to keep the subscription, cancel it, or return to monthly payments. : It is an automated showing app and text tool to receive appointment requests and feedback from buyers and sellers. Home staging guidance: Make sure your home is ready for photos and give buyers a great impression of the property. Negotiation and transaction support: Offer review, negotiation, and transaction support that includes tracking forms and deadline support for your home sale. Unreal Estate Customer Feedback These online reviews were taken from their previous name, USRealty.com, since the company has rebranded recently to Unreal Estate. Most Unreal Estate users are satisfied with the syndication feature and claim that listing syndication to 720-plus national and regional websites boosts the exposure and views of their listings. Aside from this, many users are elated with the agent concierge services of . It helps sellers and buyers to have a smooth and stress-free transaction. However, users wished that the website had more monthly site traffic. Currently, Unreal Estate has monthly site traffic of 16,915, which is not an ideal number of visitors. If you want tremendous monthly site traffic, review . It has a 1.3 billion monthly site traffic that can help your listings rank higher and increase their visibility. Beycome.com: Best for Its Multiple FSBO Listing Packages has the most FSBO listing packages compared to the other providers on this list. It offers three packages that cater to all homesellers' and buyers' requirements and needs, like high monthly site traffic, unlimited edits on listings, and customized property reports. All packages are available in Florida, Illinois, Georgia, South Carolina, North Carolina, and Alabama. The basic package is also offered in Minnesota, California, and Connecticut. Additionally, each package includes various listing features like local MLS access, active listing until you close, listing syndication to top real estate sites like Zillow and Realtor.com, unlimited updates and changes, and a free open house scheduler. For Beycome.com’s concierge service, you’ll receive hands-on support with negotiations, setting a listing price, and closing. But you’ll be charged $599 upfront in addition to 1% of the home’s sale price. Real estate agents typically charge 4% to 6% of the sale price as the commission, so Beycome is much lower and guarantees full service and support. Additional Beycome.com Features Insurance: Beycome.com partners with Young Alfred to provide insurance for homes, rental homes, condos, autos, and pets. Homeowners insurance calculator: This shows how your home insurance rate compares to the market. Encode your ZIP code and your annual premium, then submit. Property price estimator: Beycome.com uses a comparative market analysis (CMA) tool to show you your property's current worth on the market. Real estate glossary: Shows real estate terms and definitions. This helps investors understand the jargon related to real estate. Beycome.com Customer Feedback received a 3.9 out of 5 customer review rating from its users. Many users are happy with the multiple FSBO listing plans. In addition, most users like that Beycome.com provides access to local MLS. This helps sellers and buyers have a wider pool of property leads. Nevertheless, Beycome.com received negative feedback regarding the lack of a free plan and mobile app. If you want a free program and access to mobile apps, consider . It is a free FSBO listing site with a mobile app to be accessed by buyers and sellers. How We Evaluated the Top For Sale By Owner Sites We considered dozens of for sale by owner websites and chose the top six based on their pricing structure, features, monthly site traffic, and reviews. After a thorough evaluation, we discovered that is the best site for FSBO, with a rating of 4.19 out of 5. ForSaleByOwner.com was ranked first due to its closing assistance service availability in 14 states, Rocket Homes licensed real estate advisers, and free, customizable, and professional-quality listings. Also, ForSaleByOwner.com provides real estate legal forms, a USA real estate property investment directory, and a security feature to help buyers and sellers safely access public property records and real estate profiles nationwide. Other factors we examined to evaluate the best FSBO sites for buyers and sellers include:
September 20, 2022
Normal Wear & Tear Versus Damage Guide (+ Checklist & Pictures)
Normal wear and tear occurs naturally in rental properties due to aging and regular use by tenants living in the property over time. This is different from property damage caused by tenants, which usually results from negligence, carelessness, or abuse. Landlords need to fix normal wear and tear (e.g., faded paint and dents in walls) but aren’t required to pay for tenant-caused damage. State laws and landlords decide whether the damage is considered normal wear and tear or not. Differentiating Normal Wear & Tear From Property Damage We’ve outlined the differences in the image above. To sum it all up, normal wear and tear is the result of daily use and exposure over time, whereas property damage is the result of a tenant intentionally or negligently causing damage to the property. It is the responsibility of the landlord to keep their investment property hazard-free and repair any reasonable wear and tear. Most often, the landlord will take care of any wear and tear prior to a tenant moving into the property. This can include repainting the apartment, reglazing and regrouting the bathroom and kitchen, buffing the floors, doing maintenance on appliances, and doing a deep cleaning. This money will be paid by the landlord and should be included as part of their maintenance or tenant turnover expenses. On the other hand, the tenant will be held liable for any property damage typically found by the landlord when a tenant is moving out of the apartment or during regularly scheduled maintenance checks. Property damage should not occur while tenants are living there, which is why tenants are responsible for the cost. Also, a damage is typically more expensive to fix than wear and tear. The landlord deducts the repair cost from the tenant’s security deposit, though landlord-tenant laws regarding security deposits vary by state. Generally, the landlord needs to get a repair quote from a licensed contractor and send the tenant an itemized list of the damage along with the check for the remainder of the security deposit. To avoid tenants with previous property damage issues, thoroughly screen applicants and contact their previous landlords for reference checks. You can do this online with . This tenant screening software helps you perform a full range of financial and background checks. Its SafeRent Score identifies tenants who are more likely to take care of your property and pay rent on time. In addition, Fit Small Business readers earn 20% off on landing pages—no promo code needed. Most Common Wear & Tear Concerns The most common wear and tear concerns for landlords are larger items like carpet, painting, and flooring. These are not only the most expensive items to fix or replace, but they are also the most time-consuming and often require the premises to be empty while they are being repaired. This will cause a lapse in tenancy and result in a loss of income for the landlord. However, there are many other items that a landlord must consider, like windows, walls, and countertops. Check out the table below for common types of normal wear and tear and how they differ from tenant-caused damage. Then, review the details and pictures in the list below the chart to visualize the difference between the two. How to Document Normal Wear & Tear & Avoid Landlord Tenant Disputes To keep track of new and existing damage, the landlord should perform a thorough rental property inspection before and after a tenant occupies the unit. The landlord needs to assess the overall condition of every room and document relevant findings in a rental inspection checklist. This will serve as a future reference and help you identify normal wear and tear from property damage that occurred over the course of the lease. More importantly, this will keep you from incorrectly charging the tenant and avoid landlord-tenant disputes. Here are the five steps to properly document wear and tear vs damage: 1. Create a Move-in & Move-out Checklist Before you begin renting your property, create a move-in and move-out checklist that you can use with each tenant. Alternatively, you can download our checklist below to get started right away. When signing leases with a new tenant, present this checklist to them so they know you will be conducting an inspection on the day they enter and depart the property. This will establish a trusting and transparent relationship with your tenants and show you are conscientious about keeping your property clean and well-maintained. 2. Conduct a Move-in Inspection Print out the move-in/move-out checklist and thoroughly inspect each room with the tenant. The tenant and landlord will complete the checklist together and mutually agree on the property’s condition upon move-in. Document the property's current condition and photograph each area, including all appliances and outdoor areas. Each party will have a copy of the signed checklist to keep on file. To avoid costly legal disputes, all tenant expectations—such as who is responsible for cutting the grass, snow removal, and common area maintenance—should be in writing and included in the lease agreement. You should also specify in the agreement that you have the right to deduct expenses from the security deposit to repair damage caused by the tenant. For damages exceeding the security deposit, landlords may collect the rest through an agreement with the tenant or court action. Customize state-specific lease agreements easily using property management platforms like . Lease agreement templates at TurboTenant are crafted by lawyers and include all the provisions necessary to stay compliant with your state's landlord-tenant laws. Include lease specifics, rent, security deposits and other fees, pet and smoking policies, and other additional terms about your rental unit. 3. Conduct Regular Maintenance It is the landlord or property manager’s responsibility to conduct regular inspections and keep the property hazard-free. By doing routine inspections, you will show the tenant you care about the property and expect them to do the same. This will also help you keep track of normal depreciation and note tenant-caused damage during each inspection. Regular maintenance checks should be performed periodically for each apartment as well as the building in general. Plan to visit each tenant’s property every three to four months for a quarterly inspection, but you should also do weekly and monthly inspections of the building's interior and exterior. This will let you assess if there is anything that needs repair or if there has been damage done to the property. 4. Respond to Tenant Requests Always respond to tenant requests promptly to show that maintenance is being done in a timely fashion, and thus rent should also be paid on time. It’s also less expensive to fix an issue the moment it arises than wait for it to get worse. If the request is related to normal depreciation, doing quick repairs helps avoid tenant-caused damage. Tenants need to immediately report any property damage so the landlord can fix them as soon as possible. With real estate software like , tenants can quickly escalate maintenance requests to landlords and ask for repairs. Avail is a property management platform that enables landlords to manage their rentals online, including property maintenance. Tenants could also upload photos of the issue, send in-app messages, and monitor updates of their requests on the platform. 5. Conduct a Move-out Inspection Both tenant and landlord should use the move-out checklist to determine if any of the tenant's security deposit will be retained for cleaning or repairs after they move out. While filling out the move-out checklist, compare it to the move-in checklist to see what condition the property was in before the tenant moved in and if there's any damage the tenant should be responsible for. Don’t forget to document damages and photograph each area. If the tenant denies property damage claims, the landlord should be prepared to go to court. You may be asked to provide proof of correspondence, including how the tenant was notified of the security deposit deductions, proof of where the security deposit was kept, and a copy of the lease. This is why it’s important to use certified mail when sending contractor bids or itemized deductions for easy tracking. You should also use a different business bank account to separate security deposits from other property-related expenses. How to Deduct Damage Expenses From a Security Deposit The security deposit tenants pay at the beginning of their residency helps protect the landlord from having to pay for expenses that go above and beyond normal wear and tear. In case of tenant-caused damage, the landlord is allowed to deduct the repair costs from the security deposit. Typically, landlords must return a tenant’s security deposit within 14 to 60 days (depending on the state) from the time the tenant moves out. For instance, in New Jersey, a security deposit needs to be returned within 30 days, whereas in New York, it must be returned within 14 days. If there are deductions on the security deposit, the landlord should get a contractor’s bid to repair the damage. Then, subtract it from the security deposit and mail the tenant the itemized deductions and a check for the difference between the deposit and the cost of the damage within the allotted number of days. Please note that laws on security deposits may vary by state. Example of security deposit deductions While using a contractor's bid is better, most states allow an itemized deduction list instead. Other deductions include unpaid utilities and overdue rent, in which you need to provide proof of the bill. If the landlord fails to send the full list of itemized deductions within the stated period, the tenant can take them to small claims court. If the tenant’s security deposit does not cover the cost to repair all damages, the landlord can file a complaint to the small claims court. However, this can be costly and time-consuming. If the damage exceeds small claims court guidelines, the landlord will have to hire an attorney and sue the tenant in municipal court, which is even more expensive. It may also be difficult to enforce a judgment against the tenant. To avoid this, communicate with your tenant and explain the situation so your tenant will have a clear understanding of each repair cost. Bottom Line Normal wear and tear is when a property or material deteriorates due to aging and exposure over time, which is considered normal depreciation. The landlord is responsible for keeping the property hazard-free and fixing damages caused by natural deterioration. Property damage caused by a tenant's neglect or abuse can be deducted from their security deposit. To avoid costly and messy landlord-tenant disputes, identify what is normal wear and tear in a rental and accurately document property damage in the move-in and move-out checklist during inspections.
September 20, 2022
What Does a Property Manager Do & How Much Do They Cost?
Property managers oversee the management, maintenance, and operation of residential and commercial real estate on behalf of property owners and investors. They are also responsible for finding and securing qualified tenants for vacant rental units and collecting rental payments. The responsibilities of a property manager differ depending on the type of property being managed, the management contract terms, and the amount of money they are paid. If you’re wondering, “What does a property manager do?” continue reading to learn more about property managers, the differences from a property management company, manager responsibilities and duties, how much does a property manager cost, and what to expect from their role. What Is a Property Manager? A property manager is an individual that manages rental properties. Landlords and rental investors hire property managers to grow and scale their businesses, free up their time, and increase their returns. Moreover, a rental property manager is responsible for screening and managing tenants, setting and collecting rent, responding to maintenance requests, establishing maintenance budgets, and marketing the rental as efficiently and cost-effectively as possible. Most property managers provide monthly paid services and a la carte options, allowing landlords to choose which landlord duties and responsibilities to outsource and which ones to handle. A reliable property manager demonstrates excellent communication skills when dealing with landlords, tenants, and vendors, and has a keen eye for detail to maintain the property and increase its value. According to Finbold, the average property manager's salary is determined by the type of property they manage: residential, commercial, or industrial. Residential property managers earn an annual average salary of $48,583, with salaries typically ranging from $36,000 to $59,000. On the other hand, commercial property managers earn an average yearly salary of $64,373, with the majority earning between $50,500 and $75,500. However, a property manager's salary can vary widely depending on many important factors, including education, certifications, additional skills, and years you have spent in your profession. Difference Between a Property Manager & Property Management Company What a property management company does is essentially the same thing as what property managers do, unless the property manager is an employee or on-site superintendent of residential or commercial properties. Property management companies can have one staff member or several managers, maintenance and administrative staff, security officers, advertising departments, and accounting professionals. It’s important to know the difference so owners understand who to hire for their type of income property. Larger property management companies tend to manage larger portfolios of properties, while smaller property management firms handle smaller portfolios of either residential rental properties or small office buildings. Some online property management software platforms offer separate property management packages designed for property managers and property management companies based on portfolio size. Responsibilities & Costs of a Property Manager Property managers save landlords time by managing daily tasks and responding to emergencies. Despite having to pay property management fees, property managers save landlords money in various ways, such as reducing tenant turnover, expediting evictions, and staying up to date on current market rents to ensure landlords get the most income possible from their rentals. The table below illustrates the number of hours landlords could save monthly by hiring a property manager, as well as the corresponding costs. These are average costs and may be higher or lower depending on various factors like the size of the rental and the number of properties to be managed. Still, they are a great starting point when deciding whether or not to hire a property manager. The amount of time saved is calculated using the average amount of time landlords spend on various tasks. Consider how much time you spend managing your property to determine your potential time savings. As for the property management fees, they are based on national averages. Here is a breakdown of these duties and more that a property manager must handle on a daily basis: When to Hire a Property Manager Even though there are many benefits to hiring a property management company, it can be costly. Aside from the cost, hiring a property management company isn't for everyone. Consider the following factors to see if hiring a property management company is good for you and if you do need one: Managing out-of-state properties: Hiring a property manager can save you time and travel expenses if you don't live near your property, like managing your vacation rental property. It's also wise to have someone nearby to respond to emergency calls. Maintaining large properties: If you manage more than five rental properties, you will probably reach a point where the work becomes too challenging to handle on your own. Even the most basic tasks can become exhausting when managing multiple properties. When you reach this threshold, hiring a property manager or property management company is wise. Handling hard-to-manage tenants: Property managers serve as buffers between tenants and landlords. They understand and know landlord-tenant laws, how to deal with terrible tenants, and handle evictions, property inspections, leasing, and policies on rent collection. Therefore, hiring a property manager or management company will help you avoid stress concerning managing difficult tenants. Building a portfolio: If you're building an investment property portfolio, you may want to hire a property manager. The property manager can help stabilize and manage properties. Required by your lender to outsource property management: Some lenders require hiring a property manager. They may also require hiring one if the borrower has no prior experience with investment property or if your property is struggling financially. How to Hire a Good Property Manager Assess your prospects carefully if you decide to hire a property manager. You can get referrals from other landlords, real estate agents, and your homeowner’s association. Also, look for testimonials and reviews on property manager websites and social media pages to find a suitable property manager for your business. In addition, you can search online professional directories like the Institute of Real Estate Management's Membership Directory to find certified property managers or the National Association of Residential Property Managers site for a NARPM property manager. Looking for specific characteristics like timeliness and attention to detail in a property manager is essential. Remember that the property manager will have frequent interactions with your tenants, so finding one with solid communication skills and a pleasant personality is critical to the success or failure of your rental property business. Qualities important in a good property manager include: Strong communication skills: Communicating well with you, your tenants, vendors, and service providers is critical to the success of your business. Keeping you informed is part of good communication. Friendly personality: A property manager who is easy to get along with equates to lower tenant turnover, faster response from service professionals, and someone easy to work with. Detail-oriented: Managing rental properties with many moving parts requires strong attention to detail and excellent organizational skills. Ask how many properties they manage and what tools they use to organize them. Timeliness: If the property manager is always running late, is slow to return calls, and seems stressed out, consider them a red flag. Dealing with this property manager will result in more work for you. Firm, when necessary: While a friendly personality is essential, a good property manager also must be able to handle challenging tenants and protect your property and your interests when issues arise. Reasons to Hire or Not Hire a Property Manager Owning real estate can be an excellent way to gain financial security, but it takes a lot of effort to maintain one property, let alone multiple investment properties. A property manager is a great strategy to take if an owner needs additional assistance or if they do not want to deal with the day-to-day maintenance of their property. However, hiring a property manager has its drawbacks too, as it adds to your monthly expenses, and it’s not easy to find a good property manager. Here are things to consider when you’re making a decision whether or not to hire a property manager: Alternatives to Hiring a Property Manager If you decide that hiring a property manager is not for you, there are other options to consider when outsourcing rental property management. Depending on the type of property you own and your proximity to your rentals, you also may consider self-managing your rentals. Here are a few options: Online Property Management Software Online property management software helps you manage your maintenance, tenant screening, leasing documents, and listing vacancies across the internet. Online property management software offers comprehensive and a la carte property management services. Also, it allows landlords to conveniently handle everything in one convenient place. Here are the best online property management software providers that provide the best features at an affordable price: Turnkey Rental Properties Turnkey properties are a good option if you want to buy a property that doesn't require upfront maintenance, is sometimes fully rented, and has property management services. When considering a turnkey property, ensure the property management company is experienced. Review their property management agreement and interview them to guarantee they're a good fit. If you want to invest in a turnkey real estate property, provides several investment options for passive real estate investors. It includes the opportunity to invest in a property, a portfolio, or bring their own property. Roofstock operates in 27 states and sells brand-new and completely renovated single-family homes occupied by renters and maintained by a property management company. It also provides a 30-day money-back guarantee and a lease-up guarantee. Self-manage Rental Properties If you only have a few units or are planning to buy a duplex, triplex, or fourplex and live in one unit, you might want to self-manage your rental properties. Hiring a property management company for a few units typically isn't cost-effective. If you self-manage, you'll need a separate bank account for handling rental income and expenses. Bottom Line Landlords can save time and money by hiring a good property manager. Property managers for rental homes take care of routine tasks, such as screening applicants, resolving property maintenance issues, and collecting rental payments for busy landlords who outsource real estate property management. However, hiring a property manager can be expensive. Review your finances and investment portfolio to see if hiring a property manager is right for you.
September 19, 2022
Top 10 Benefits of Investing in Real Estate (+ Possible Cons)
When done correctly, real estate is one of the most popular, profitable, and stable investment choices that can generate a high profit return. The advantages of investing in real estate include the ability to generate wealth, use equity as leverage, and protect your money from inflation. In addition, there are immeasurable benefits to investing in real estate, like improving your community, providing housing, and building a network. Make sure you’re aware of the pros and cons of real estate investing and choose the right tools to succeed. Start gathering information about potential real estate investments, searching for properties, or getting knowledge from the learning resources on . Roofstock is a real estate listing platform built specifically for investors, so every listing includes extensive financial property data like estimated rent costs, cash flow, and annual rates of return. Here are the top advantages of investing in real estate: 1. Generate Wealth & Build Equity The first of many advantages of investing in real estate is the power of equity. When you own a house or piece of property, it naturally appreciates, or increases in value. As you pay the mortgage down and allow the house to appreciate, you build equity. Equity is an asset part of your net worth, making it one of the most straightforward ways to generate wealth. For example, according to FRED, the value of homeowner equity nearly tripled between 2011 and 2022. With equity, you have multiple options to generate cash flow and get a return on your investment (ROI). If you sell the home at the right time, you can get a large profit. On the other hand, you can use equity as leverage to increase your investment portfolio even further. With equity from one property, you can buy a rental property to generate monthly income and double your gains from building equity. 2. Reliable Long-term Investment Although the real estate market fluctuates, it is a stable investment that continually increases in value. Compared to the stock market, which is a highly volatile investment, real estate is not prone to frequent market swings or inflation. Properties don’t immediately change in price based on capital contributions or political volatility, making real estate a safe and stable long-term investment. The charts below visually show how the stock market and real estate market fluctuate and grow over time. Notice the peaks and valleys the stock market graph displays. While the real estate graph has fewer ups and downs, it goes steadily over time. Plus, real estate is a physical asset that can always be monetized. Owning real estate benefits the investor by providing ongoing income and tax benefits while the property increases in value. Renting the property provides a cash-on-cash return, and residing and reselling the property provides an ROI. 3. Protection From Inflation While most people fear inflation, real estate investors don’t have to. Properties are rarely impacted by the effects of inflation, which is one of the most valuable benefits of real estate investing in current markets. Instead of being negatively impacted, real estate investments generally rise in value along with inflation. In fact, the graph below shows how home prices have stayed consistent along with inflation over the last three decades. As a real estate investor, increases in your expenses will be relative to the increases in property value and income. If you are a landlord, you can maintain or even increase your cash flow according to inflation by adjusting how much you charge for rent. When it’s time to increase the price of rent for your tenants, make sure you know the laws and regulations, provide the correct amount of notice, and write a professional yet direct letter. To simplify the process, start by downloading our rent increase letter template and using a property management tool like . It provides a streamlined, easy-to-use platform to manage every aspect of your investments, including screening tenants, managing maintenance requests, accepting rent payments, and communicating efficiently with residents. When you use Buildium for your rental properties, it’s easy to adjust tenants’ rent prices in just a few clicks. Learn more about how Buildium can help you. 4. Rental Properties Provide Passive Income When you invest in real estate, you open the door to generating passive income. As mentioned, property values naturally appreciate, even if you don’t make changes to the property. Rental properties generate a regular monthly income for owners regardless of whether the owner spends hours working on the property or lives in a completely different state. The ability to make money without dedicating a certain amount of time to your real estate investment provides freedom for investors. Of course, properties don’t automatically generate money without an investor putting in an extensive amount of work. It takes time and effort to find and evaluate an investment property, get funding, prepare or maintain the property, market the rental listing, and manage the tenants. However, with the right property management company or tool, every part of the process can be simple and stress-free. For example, provides tools to calculate rental prices, create and promote rental listings, screen tenants, and automate rent payments. It’s an all-in-one tool that can streamline the process of purchasing, buying, and managing your rental, allowing you to generate income and find freedom in your time. Start using Avail for free today. 5. Benefits the Community & Provides Housing Most investors focus heavily on the financial indicators of investments, but there are also unquantified benefits of investing in residential real estate. For example, responsible real estate investors can greatly impact the community by improving properties, curb appeal, and providing new housing. When real estate investors buy and repair a dilapidated property, they do much more than simply remove an eyesore. They also provide a new home for residents who need it and ensure that more community members are housed in safe, healthy, clean, and fair conditions. In addition, working as a real estate investor requires you to be heavily involved in the local community. Work with lenders, real estate agents, home inspectors, and contractors frequently, employing them for your properties. You’ll also build relationships with community members who may be neighbors, homesellers, or potential tenants. Working with local businesses helps stimulate your local economy and creates a network of professionals you can recommend and refer to others. 6. Wide Variety of Investment Options Investing in real estate can mean various things—from buying a single-family property to buying a parcel of land or leasing commercial real estate. The right type of real estate investment will depend on your financial abilities, financial goals, and your lifestyle. As a real estate investor, you are in charge of the types of properties and investments you purchase and how you generate money. This flexibility is one of the advantages of real estate that is especially appealing to many people. Here are some of the investment property types you can choose to invest in with links to articles that will give you the details of how to buy that type of property: Multifamily properties Duplexes, triplexes, and fourplexes Commercial properties Land Vacation properties Apartment complexes or buildings Turnkey investment properties Distressed properties Regardless of how you start investing in real estate, creating a business plan is important. For example, some investors simply use rental income to save money on top of their existing careers. Others use the rental income to cover expenses so they can travel or expand their portfolio even further. With a detailed real estate investing business plan, you’ll clearly analyze your strengths and weaknesses, define your goals, and establish a plan to reach your goals. 7. Effective Means of Saving for College Funds or Retirement Real estate investing, when done right, is a stable way to increase wealth over a period of time. This makes it an ideal method of funding specific types of goals, like college funds and retirement. For instance, parents may buy a rental property with a 15-year mortgage and put the rental income into a savings account. The property could be paid off before the child turns 18, then either sold or used for continual cash flow. On the other hand, the same process could be used to save for retirement or to supplement retirement funds. Since rental income is remarkably stable, retirees can use the cash flow while continuing to build equity. 8. Relatively Easy to Finance & Create Leverage Real estate investments are relatively easy to finance, especially when compared to other assets. You can borrow 50% to 90% of the acquisition cost, and the interest rates are often below the anticipated ROI rate. In 2022, the average interest rates are about 4.73%, and mortgage interest rates haven’t gone above 6% for almost 15 years, as you can see in the chart below. In comparison, it’s not uncommon to get an ROI of 15% or more on investment properties. However, it’s essential to understand that the rate of ROI for investment properties can vary significantly, and ROI may not be the only calculation or most important method to define your profits. Instead, depending on the type of real estate investment you make, it’s better to focus on the cap rate or cash-on-cash returns. Learn more about calculating cap rates, cash-on-cash returns, and ROI. Yet another financial advantage of investing in real estate is the ability to use financing to increase the ROI of a property, which is called positive leverage. For example, if you wanted to invest $200,000 in the stock market, you’d have to put in the full amount of money. On the other hand, you can invest $200,000 in a duplex home for about $40,000 with the right financing. The lender puts up 80% of the cash for the investment, but you keep the profits from the property. If the $200,000 stock market investment and the $40,000 duplex investment appreciate at the same rate, your ROI would be significantly higher on the real estate investment since the upfront costs were so much lower. You can automatically calculate the ROI of any property listed on with its financial calculators. Roofstock is a listing marketplace created specifically for investors, which includes property information, financial details and calculations, and extensive analyses for every listing. This makes it easy to find potential properties and accurately evaluate their rate of return. Roofstock provides a selection of lenders who work with investors, making it easy to see rates and get pre-approved for financing quickly. Sign up for Roofstock for free and see how it may be the key to your next or first real estate deal. 9. Tax Benefits of Real Estate Investing It’s common knowledge how real estate sales and rental properties make money. However, there are even more financial real estate advantages that are not commonly understood, like tax benefits. For instance, rental property depreciation expenses help owners significantly lower their taxable income from the property—sometimes even eliminating it. Other rental property tax deductions can include: Mortgage interest payments Loan origination fees Insurance payments Utilities Maintenance, repairs, and improvements Advertising and marketing Homeowner association fees Property management There are also other options that allow investors to maximize tax savings, like Opportunity Zones and Section 1031 of the Internal Revenue Code. Section 1031 allows you to postpone paying taxes on the sale of your property when you reinvest the gains in another property, and opportunity zones allow you to avoid capital gains by investing in a specified piece of land. Of course, these laws can be complex, so it’s vital that you have a thorough understanding of how they work and how they will impact your finances before making decisions. An ideal way to gain the knowledge and confidence you need to make a smart investment decision is by taking professional training courses through , an online education provider. Lorman offers a course specifically for this topic, titled “Advanced 1031 Exchange Concepts and Opportunity Zones.” Courses are offered through live webinars with an instructor, or you can purchase a recorded version to continually refresh your understanding. 10. Freedom, Flexibility & Autonomy Most people focus on the financial benefits of being a real estate investor, but there are also many personal and non-monetary reasons for investing in real estate as a career or side hustle. It allows an individual who may or may not have any professional education or career experience to build wealth and directly impact their entire community. It also provides a level of freedom that most other careers cannot offer, including financial freedom, time freedom, and the flexibility to choose your own unique business strategy. For example, investors who own multiple properties have the freedom to change their primary residence at any time at almost no cost at all. Many people prefer a two-story house when raising a family but decide to downsize to a one-story in their golden years because it is more manageable for them. In contrast, you may choose to “house hack,” or live in a duplex unit or triplex unit to start generating rental income, then move into a larger home when you have multiple properties covering your expenses. Investing is also particularly appealing for those with entrepreneurial spirits since you can invest in a variety of different ways. You may choose to flip houses or hold property to let appreciation create wealth. You may choose to be a landlord and manage properties, or own rental properties and outsource all of the management. You might even find that flipping land or developing land for commercial businesses is your preference. Since you get to be the boss of your investing business, there is no limit and no restrictions on your decisions. This flexibility can be extremely fulfilling for entrepreneurs. Where to Find Investment Properties With such a wide variety of advantages of investing in real estate, it’s an exciting choice for new investors. It can be tempting to rush into an investment property purchase when an investor is focused on the possibilities, but real estate purchases take time. The most successful investors know how to find investment properties for sale and how to evaluate them for certain criteria to find the best investment. Although it takes time to learn this process, using the right tools to search for properties is an important step. Start by searching for properties with these top real estate listing sites: Possible Cons to Investing in Real Estate & How to Avoid Them Learning the advantages and disadvantages of investing in real estate before making a purchase is important to have accurate expectations. There are some potential drawbacks to real estate investing, and you must be aware of them in order to avoid or prepare for them. Some of the potential disadvantages of real estate investment include: Bottom Line While investing in real estate isn’t always easy, it offers many advantages that can lead to financial and time freedom. We’ve gathered some of the most important benefits of investing in real estate to help potential and current investors decide if it’s the right choice to meet their goals. Before committing to real estate investing, check out the pros and cons as there aren’t any investing strategies that are completely free of risk.
September 19, 2022
6 Steps on How to Finance & Buy Multiple Rental Properties
Learning how to finance and buy multiple rental properties doesn’t have to be stressful. The process is the same with investing in a single rental property, from researching the best location to planning how to manage your property effectively. However, buying multiple rental properties requires stabilizing and seasoning your current properties, in-depth knowledge of different property types, knowledge of analyzing local markets, and financial calculations of potential income and expenses. Here are six steps to help you learn how to purchase multiple rental properties: 1. Stabilize & Season Your Current Rental Property Before learning how to buy and finance multiple rental properties, you must stabilize your current property by collecting market rents, filling vacancies, lowering tenant turnover, and minimizing capital improvements. Most lenders choose a fully stabilized rental property when applying for a home equity loan or line of credit. Before they lend on another rental property, some lenders require a six- to 12-month seasoning period on your first loan. The seasoning period is the time a property has been owned or has had an active mortgage. While each lender has a different "seasoning period," most progressive, investor-friendly organizations have a three- to six-month seasoning period as the standard. A 12-month seasoning period is more common for more conservative institutions working with owner-occupied loans. If a property has not been adequately seasoned, banks and lenders frequently won't permit investors to refinance it. Significance of Seasoning for Investors With Multiple Properties The Buy, Rehab, Rent, Refinance, Repeat (BRRRR) strategy of real estate investing focuses on buying properties that require work. Investors then rehab them to raise property value significantly, rent them out to get cash flow, perform a cash-out refinance, and use the proceeds to start the process with a different property all over again. The length of a lender's seasoning period significantly affects how quickly the "Repeat" can occur. Because most competitive lenders have a three- to six-month seasoning period, BRRRR investors are frequently limited to recycling their cash twice a year. Comparatively, lenders with a three-month or no seasoning period can recycle the same stack of money four or more times a year. Although interest rates on no-seasoning loans may be a little higher, the increased speed and volume that investors can achieve more than compensates for this cost. 2. Consider a Mix of Property Types When investing in multiple rental properties, it's critical to consider the types of properties you want to own, flip, and manage, as well as the amount of positive cash flow you want to generate as a property. This is to understand which property type will bring a steady cash flow, substantial appreciation, tax advantages, and competitive risk-adjusted returns. Different types of properties to consider: Single-family residential Apartment complex Duplex, triplex, or fourplex multifamily buildings Preforeclosure homes Vacation rental property Turnkey properties Commercial properties Land You can buy one type of property or build a mixed portfolio when deciding which type of property to purchase. However, consider how many properties you want to own and when you want to buy them to maximize the amount of money you can make in real estate. Ideally, you should not purchase more than three to four properties yearly. 3. Find New Rental Property Locations Once you've decided on the types of properties and the number of properties you want to own and manage, you can start looking for property listings on , , and . Your real estate agent can also set up a subscription to send notifications directly to your inbox based on your property criteria. There are tools available that will evaluate properties for you, such as . It assists an investor in analyzing rental properties, BRRRRs, flips, and multifamily buildings, estimating profits, and locating the best real estate deals. It quickly searches public records and online listings and imports property details, such as list price, assessed value, rent, property taxes, homeowner association (HOA) fees, and photos. 4. Evaluate Financial Projections of Your Rental Properties If you're considering buying and financing multiple rental properties, analyze the rental market and do not buy an investment property impulsively. Continue reading to learn how to evaluate your rental property. Rental Property Cash Flow Projections Cash flow projections help you create a time-bound roadmap, avoid wasteful spending, and determine whether your plan is profitable. When considering how to buy multiple rental properties, consider positive cash flow rather than equity or appreciation, as these fluctuate. Your projection aims to develop a profitable business, so if expenses consistently exceed revenue, you’ll need to review and evaluate how to increase income or cut costs. You may also need to increase expenditures by advertising vacancies or renovating, repairing, and upgrading, which will command higher rents and greater profitability. Critical Metrics for Evaluating Rental Properties There is no one-size-fits-all formula for calculating whether a rental property is a good investment, so you’ll want to use a variety of metrics. Investors often use three key metrics to evaluate a rental property: capitalization (cap) rate, cash-on-cash return, and return on investment (ROI). Here are the three key metrics in evaluating rental properties: Using metrics to determine the performance of an investment property can help you avoid costly mistakes and stay on track with the goals you set in your cash flow projections. 5. Decide How to Finance Multiple Properties & Prepare Paperwork When learning how to purchase multiple properties, financing needs to be a major consideration. Financing multiple rental properties can be challenging, so getting creative is often necessary if you plan to own more than four investment properties. There are many types of investment property loans you can use to help you build your rental portfolio. The best financing for your acquisition will depend on your personal financial situation and the financing needed. The paperwork and documentation you will be required to submit when purchasing multiple rental properties will vary by lender and loan type. However, in most cases, you will be required to submit documents similar to obtaining a loan on a primary residence. Regardless of loan type, you should be prepared to provide the following—in addition to any lender-required forms and applications—upon your lender’s request: Personal and business tax returns: At least the two most recent years Pay stubs: At least the three most recent pay periods Bank statements: At least the three most recent statements Explanation of prior experience: While some lenders are open to first-time investors, most will require that you have prior real estate investment experience. 6. Create a Plan on How to Manage Multiple Properties As you find out how to purchase multiple investment properties, you will need to decide whether you will self-manage the properties or hire a property manager or a property management company. If you hire a management company, you’ll likely pay between 4% and 10% of the gross rental income in property management fees. But if you manage multiple properties by yourself, it’s wise to set up a separate limited liability company (LLC) and sign up for online rent payment services and property management software. Rent collection can be a difficult task for independent landlords. As a result, using online rent collection software, such as or , simplifies tenant rent payments, making it easier for landlords to collect money and manage their rental properties. Online rent payment services are an excellent resource for busy landlords because they offer various tools, from maintenance requests to online rent payments, to fit multiple landlord management styles and tenant needs. Moreover, whether you or someone else manages your rentals, you’ll need to handle the finances, maintenance, and tenants. Management companies or property management software, such as and , can help in managing tenant-related issues, tenant screening, property maintenance, banking and finances, escrow deposits, and paying bills, and provide an additional layer of liability protection. In addition to liability insurance and the management LLC, separating each property into its legal entity is a good idea to mitigate liability further. LLC is commonly used, but some owners put their properties in the names of real estate trusts or their spouses. Consult your attorney and accountant to determine which entities are best for you. Here are top-recommended software tools you can use to help you manage your multiple rental properties: Bottom Line Do not make rash decisions about buying and financing multiple rental properties without carefully assessing factors such as the house's condition and potential ROI. The steps and tips outlined above serve as a guide the next time you consider investing in multiple rental properties. Be thorough and strategic in every step to achieve your desired result and become successful in investing in multiple rental properties.
September 16, 2022
Landlord Rental Vacancy Rate Guide (+ Calculator & Statistics)
A vacancy rate defines the percentage of unoccupied units in a multiunit rental property. It is a valuable metric that helps determine whether a rental property is performing well and if it will be a profitable investment. To learn more about what a vacancy rate is, we’ll use a vacancy rate calculator and discuss why it matters to investors, how to decrease vacancies, and vacancy rates statistics in the US. How to Calculate Vacancy Rate To calculate your property’s vacancy rate, these are the two numbers you’ll need to gather: the total number of units in the building and the number of currently vacant units in the same building. If you already own the property, review your ledger to find these numbers. If you’re evaluating a new property purchase, have your real estate agent gather this information from the current owner or do your own research online. Learn how to calculate the vacancy rate using the formula below or by inputting your figures into the calculator: Vacancy Rate Formula = # of Vacant Units x 100 / Total # of Units Example: In an apartment building with 80 total units, 12 of the units are currently unoccupied. Using the vacancy rate calculator formula, we first multiply the number of vacant units by 100. (12 Vacant Units X 100) ➗80 total units = 15% vacancy rate In the example above, the average calculation for the vacant rental property is 15%. If the average vacancy rate for the area is 5%, it’s clear that the building is not performing properly. The next step is to determine why the vacancy rate is so high. It may be because the apartments are overpriced, outdated, need repairs, or the building is unattractive and lacks amenities. What Defines a Good or Bad Vacancy Rate? What’s considered to be a “good vacancy rate” is highly relative to each property’s location, rental market, economy, season, and price. Most investors consider between 2%-4% a good vacancy rate in metropolitan areas. Rural areas tend to have higher vacancy rates across the board, with a current average rental vacancy rate of 6.7%. In general, high or “bad” vacancy rates mean that a property is not performing well, and may indicate poor property condition, poor management, or local problems like job loss and economic downturn. In contrast, low or “good” vacancy rates are generally considered an indicator that people want to live in the building or unit and that there is a strong demand for rentals. However, low vacancy rates can also be overlooked as an indicator of a potential problem. If the vacancy rate is constantly at zero, then it’s likely that the rent price is too low and must be raised to increase cash flow. Investors must know how to set the rent price for a property to maximize cash flow and minimize vacancies. In order to set a rent price that attracts quality tenants and maximizes cash flow, you need to get important market data like comparable unit prices and rental trends. With rent analysis report, you can get the most detailed and accurate information about the local market and automatically view a rent estimate for your property. Generate a rent analysis report in a matter of minutes and get closer to lowering your vacancy rate with Avail today. Why Vacancy Rates are Important to Investors Vacancy rates are typically used to help landlords or investors evaluate whether a potential rental property purchase will be profitable. However, it is also an important metric to evaluate the rental market across a neighborhood, city, state, or country. When you perform a rental market analysis (RMA), you’ll gather and compare information about multiple rental properties throughout an area to comprehensively evaluate the overall rental market. Real estate vacancy rates indicate how a rental property is performing, especially when compared to average vacancy rates in comparable properties. This is critical information for investors to make the best financial decisions. For example, a duplex with a vacancy rate of 4% may appear to be performing well. However, if the average vacancy rate for the area is only 1.5%, the property should be more closely evaluated to find potential problems. Vacancy rates can also help investors determine whether or not the property is a profitable purchase, but they shouldn’t be the sole determining factor. Some of the most common factors that impact vacancy rates include: Location Rental listing marketing Condition of the property Property management style Rental pricing Rental market demand In many cases, determining the factors contributing to the rental vacancy rates will help you learn more valuable information than the general vacancy calculation. For example, if a rental property is in a location with high demand for rentals and has a competitive rent price, a high vacancy rate would expose a potential problem with the property, like a need for repairs or updates. On the other hand, if the property is in good condition, in a strong rental market, and managed successfully, the problem could be as simple as marketing the listing. Vacancy rates are incredibly important for investors, but should always be taken into consideration along with other factors and property metrics. If your rent price is competitive, but your rental listings aren’t getting many responses, try using a listing tool to more effectively attract tenants. For example, is a property management solution that makes it easy to create a rental listing and automatically shares them with popular public listing sites. Buildium includes tools for communicating with applicants and tenants, screening potential tenants, and managing rental properties. Plus, it provides multiple packages to fit your needs, whether you have one rental property or hundreds of units. Sign up today and see how Buildium can help decrease your vacancy rates. How the Vacancy Rate Formula Affects Other Real Estate Metrics Vacancy rates play a crucial role in all the necessary rental property calculations. Knowing how many vacancies there are will help investors accurately calculate the property’s rental income and long-term return on investment (ROI). Vacancy rates are used to calculate rental property metrics like: Net operating income (NOI): This is the total potential income of a rental property after all income, expenses, and losses from vacancies are taken into account. Learn how to calculate NOI in our article about buying apartment complexes. Cap rate: This shows the rate of return for the property over time, including losses from vacancies. Cash flow: The amount of profit the property makes after all expenses each month. Return on investment (ROI): This is a percentage that reflects the amount of profit investors are generating on a property on an annual basis. Occupancy rate: This is the opposite of the vacancy rate, and shows how many units within a rental property are occupied and generating income. Rental market analysis (RMA): This provides an overall assessment of an area’s rental potential, including average vacancy rates, price per square foot of comparable properties, and rental price adjustments. Gross rent multiplier (GRM): This calculation determines how many years or months it will take to earn back your investment in the property, which depends on accurate vacancy rates. If you are evaluating rental properties for the first time, gathering property data and making so many calculations can be overwhelming. However, tools like help automate the process with more insightful data, calculations, and reports—making your decisions easy. With a rentability report, you’ll automatically receive detailed property and financial insights, local market trends, and recommended rent prices. Get a detailed property analysis through TenantCloud today. How to Avoid High Vacancy Rates Vacancies are inevitable for everyone who invests in real estate, but it becomes a big problem if units remain unoccupied for weeks or months at a time. Fortunately, it’s relatively easy to learn how to efficiently turn over rental units and prevent units from long-term vacancies. The best ways to decrease vacancy rates are: Thoroughly screen new tenants: Choosing good quality tenants who care for the property will help you foster long-term relationships, minimize vacancies, and cause less intensive repair and maintenance costs. Improve curb appeal: Whether you have an apartment complex or single-family rentals, making them look clean and appealing will significantly impact your ability to attract and keep good tenants. Offer amenities: When possible, offer on-site conveniences like parking, laundry, a fitness center, or security. These will help attract more tenants and potentially allow you to increase rental prices. Establish an efficient communication system: Make sure tenants can easily communicate with the landlord, property manager, and maintenance member when necessary. This improves the tenants’ experience and builds trust, which helps keep them motivated to take care of the property. It also helps you stay on top of maintenance requests. Consistently maintain properties: By maintaining properties on an ongoing basis, you won’t have to designate time to make repairs and updates when tenants move out. This should include preventative care like changing air filters, pest control, and checking smoke detectors. Use a property maintenance checklist to track these tasks. Promote and advertise your rental: Renters can’t apply for your property if they don’t know it’s available. Learn how to market your rental listings effectively so that you can start gathering applications as soon as your previous tenants move out. If you don’t already have an efficient strategy for turning over units when tenants move out, consider using property management software to streamline these tasks. For example, is an affordable and easy-to-use tool for screening tenants. It allows you to customize a professional rental application and easily run background checks, including credit reports, criminal background checks, eviction history, and income verification. MyRental even calculates a SafeRent score that estimates the potential risk of each applicant. Average Vacancy Rate Statistics 2022 The national average vacancy rate in 2022 is 5.6%, and has declined by 9.68% in the last 12 months. This shows that vacancies across the country are higher than most investors would prefer, but that the demand for rental properties overall is increasing significantly. While knowing the average in the US is helpful, landlords also need to know the vacancy rates in their specific location and the factors that affect the vacancy rates in their area. This will give landlords a better understanding of how their property or potential property stacks up against the competition. Take a look at the state map below to see vacancy rates in your state. Also, there are a few current examples of how vacancy range can be drastically different according to different locations and criteria: In the first quarter of 2021, vacancy rates in Buffalo, New York, were 14%, but by the end of the third quarter, they plummeted to 1.1%. In 2022, the Sacramento area had an average vacancy rate of only 0.9%, while rates in Toledo, Ohio, at the same time, were 13.6%. The average vacancy rate in New York City has decreased by 40.7% in the last 12 months The average vacancy rate for apartments with 10 or more units is currently 7.3%, while one-bedroom apartments have the highest vacancy rate of all property types at 22.8%. Rental properties with prices of $300 or less per month have a vacancy rate of only 1.5%, while properties costing over $2,000 per month have a vacancy rate of 8.4% Bottom Line A vacancy rate reflects how many unoccupied units are in a rental property, which is key to helping investors calculate potential profits and identify property weaknesses. Average vacancy rates vary wildly depending on a variety of factors, so this important metric should be just one piece of your rental property evaluation. An investor with a thorough understanding of the rental market can take a property with high vacancy rates and learn how to find good quality tenants, keep the units occupied, and maximize cash flow.
September 14, 2022
6 Best Tenant Screening Services for Landlords in 2022
The best tenant screening services enable landlords and property managers to run reliable credit history, criminal background checks, employment and income verification, and eviction history at fair rates. These platforms help protect your investments while saving time, money, and energy while looking for the right tenants. Depending on state laws, landlords can charge tenants for the application and background check fees to cover the cost. We reviewed dozens of platforms to arrive at the top six best tenant screening services based on screening features, pricing, ease of use, customer support, and online reviews: : Best overall for its comprehensive tenant screening services at affordable rates : Ideal for independent landlords who need free customizable screening reports and automated reference checks : Best mobile property management app for tenant screening : Best free property management platform with auto-tenant screening feature and shareable tenant screening reports : Recommended for independent landlords looking for free tenant screening service and free rental advertising : Great for small landlords who prefer flexible ala carte and individual tenant screening reports Best Tenant Screening Services At a Glance See fullscreen table × Buildium: Best Overall Tenant Screening Service is our best overall screening service because of its comprehensive software features, affordable tenant screening reports, and all-in-one property management solution. Powered by , a US credit reporting agency, landlords can access full credit, criminal, and eviction data to help them avoid tenant scams. You only need to make a request and set custom requirements, and Buildium will begin tenant credit and background checks for you. Landlords have two screening options: basic and premium. Unlike basic tenant screening, the premium option allows for customized thresholds on recommendations, requires minimal applicant involvement, and delivers faster results. Both tenant screening plans include rental recommendations from TransUnion, a full credit report, identity verification, eviction history, and background check for renters. Buildium will automatically send tenants a reminder to complete the rental application at the three-day mark and the seven-day mark after the process begins. If you’re still considering your options, take advantage of Buildium’s 14-day free trial, allowing you to experience the platform before committing to a subscription. Additional Buildium Features Tenant screening criteria: set minimum credit score and other qualifying questions in the application form like pets, move-in dates, and deposits to easily filter qualified from unqualified applicants and stay aligned with landlord-tenant laws Property management: includes several property management functions, such as accounting, maintenance, tasks, violations, resident and board member communications, and online portals Marketing website: a do-it-yourself, free, fully integrated website for property managers, hosted by Buildium eSignatures: manage all leasing processes online and get documents signed digitally Performance and business analytics: receive insights into your residents' activities through the resident center and a detailed analysis of your business performance using key leasing metrics Buildium Customer Feedback Customers rated 4.5 out of 5 because of its robust platform and multiple tools available for property management. They also like the ability to switch between different properties in their portfolio. One client said the property management automation helped them save time and money. Landlords also praised Buildium’s customer support for its professional assistance. In less positive Buildium reviews, a client found the lease processing procedures in the basic plan complicated. Another client said it was difficult to set up the late fee charge and thought the settings for late fees were too limited. Buildium doesn’t have a free plan, and its plans are more expensive than other software on this list. If you’re managing a few properties and want to try a free property management service, we recommend . Buildium Pricing offers tiered subscription plans that include basic and premium resident screening services. In the basic tenant screening, landlords have the option to cover the cost of screening themselves or pass the cost on to the applicant. With basic tenant screening, landlords pay $15 per screening or $30 if paid by the applicant, whereas the premium screening is $18 per screening. Aside from paying the tenant screening service fees, Buildium account holders also need to pay a monthly subscription. Check out its plan inclusions below: Essential: starts at $50, paid monthly; this includes basic tenant screening, rental accounting, maintenance, tasks violation, ticket support, and online portals. Growth: starts at $160, paid monthly; aside from features included in the Essential plan, users also get premium tenant screening, unlimited e-signatures, five free bank accounts, standard reports, performance, business analytics, and live phone support. Premium: starts at $460, paid monthly; includes everything in the Growth plan, plus open API, Buildium Rewards, priority support, and a dedicated growth consultant. Avail: Best Free Customizable Tenant Screening Service With Automated Reference Checks If you’re looking for free property management software with customizable renter reports, we recommend . It provides online tenant screening services, focusing on background and credit checks for landlords—whether you need a TransUnion report, national criminal history, prior eviction data, or a complete tenant background check. Landlords could also customize application settings and screening questions to make sure tenants qualify for all their requirements. Another unique feature of Avail is its automated reference checks. Once prospects complete the online renter application form, Avail automatically contacts their previous landlords to see whether they paid their rent on time and took care of the rental property. The platform also enables landlords to conduct income verification and documentation to ensure prospects are able to pay the rent on time. Unlike most service providers on this list, Avail has a free subscription plan where landlords can enjoy comprehensive property management features, such as syndicated listings, online rent collection, and maintenance tracking at no cost to them. It also helps landlords streamline their communication with existing tenants in one software. Additional Avail Features Rental listings: create one rental listing to post across multiple sites, such as Realtor.com and Trulia, with one click Digital leases: access lawyer-reviewed, state-specific lease agreement templates, including all the necessary disclosures, attachments, and clauses Online rent collection: allow tenants to pay rent online, schedule upcoming payments, issue late fees, track rental income, and get paid faster with Avail's FastPay Maintenance tracking: track repairs with in-app messaging, photos, and automatic maintenance records Rent price analysis: complete rental market trends and rent comps so you can set competitive rent prices Avail Customer Feedback subscribers praise the platform for its ease of use, affordable pricing, and superb customer support, giving it a 4.6 out of 5-star review. One user said that Avail made the background and rental credit check, as well as communicating with applicants, easy. One property manager enjoyed the syndication between all the websites when listing available units, which helped him find tenants faster. While most reviews are positive, some experienced glitchy features, lags on the screen, and other technical issues. Avail doesn't currently have an app, which could be inconvenient for landlords who are always on the go. If you're looking for a property management app with a mobile tenant screening feature, check out or . Avail Pricing offers two subscription plans: unlimited free and unlimited plus. Both subscription plans include tenant screening services that you can purchase ala carte or as a bundled package. The price of each screening report varies depending on the state but may start from $30 each or $55 for bundled packages. Landlords can pay the fees themselves or pass them on to the applicant. To see which Avail subscription plan is perfect for your business, check the table below: Unlimited Free: free; includes syndicated listings, credit and criminal screening, state-specific leases, online rent payments, and maintenance tracking Unlimited Plus: Starts at $5 per unit monthly; includes everything in the Unlimited Free plan plus next-day rent payments, waived ACH fees, custom applications and leases, clone and reuse custom lease agreement, and create a properties website RentRedi: Excellent for Mobile Tenant Screening Process is perfect for landlords who want the convenience of mobile technology when screening applicants. Landlords can send requests, view screening reports, and accept applications directly on the mobile app—no need to log in and out on a web browser. As a tenant screening service, RentRedi provides full credit, criminal, and eviction reports. RentRedi also has an auto-tenant screening feature, which allows landlords to automatically receive a completed tenant screening report once a prospect submits an application. To run a credit background check for tenants, RentRedi has partnered with TransUnion and uses ResidentScore, which predicts rental eviction risk 15% better than traditional credit scores. It also reviews over 370 million records from state and national databases to make sure you get a thorough criminal report. Additionally, RentRedi checks 27 million eviction records through a large eviction database subject to The Fair Credit Reporting Act (FCRA), which covers all 50 states. RentRedi has other key features that allow you to automate your rental processes such as online rent collection and accounting, tenant prequalifications and applications, maintenance requests and coordination, listing syndications and advertising, and tenant and team communications. These features help landlords protect their real estate investments, filter the right applicants, and manage existing tenants. Additional RentRedi Features Rent collection: tenants can send money via credit card, ACH, cash, and banking. Landlords receive payments within three to four business days and can export payments to spreadsheets or Prequalifications and applications: set prequalification questions to immediately determine whether an applicant qualifies or not before scheduling a tour Maintenance requests and coordination: outsource managing maintenance requests and get automatic maintenance status updates sent to the tenant Listings and marketing: free and listing syndications using the RentRedi dashboard; add virtual tour options to property listings and have a free professionally designed marketing page to share on your websites and other marketing sites RentRedi Customer Feedback Customers enjoy using because of its easy setup and responsive customer support. Landlords found the mobile app very convenient and user-friendly, especially the ability to properly screen applicants, collect rents, notify tenants, and respond to maintenance requests directly on their mobile phones. Because of these reasons, RentRedi received a 4.5 out of 5-star rating. While most customers found RentRedi helpful and convenient, a few customers said they don't use some of the features included in their subscriptions. This is not cost-efficient since subscribers pay a flat monthly or annual fee. Some also experienced technical and update issues with the mobile app. If you're budget conscious and prefer to purchase ala carte features instead, check out . RentRedi Pricing Landlords can enjoy property management features, including tenant screening, by paying a monthly subscription fee of as low as $9 monthly. Prospective tenants will also have to pay $35 for the rental background check. Monthly subscription: Starts at $19.95 per month Six-month subscription: Starts at $18 per month Annual subscription: Starts at $9 per month Apartments.com: Recommended for Free Auto-tenant Screening Feature & Shareable Reports If you need fast and easy access to tenant screening reports when an applicant clicks the "Apply" button on your listing, we recommend using . Once a renter applies to your listing, they must pay $29 to run their TransUnion credit, criminal, and eviction reports online. Another unique feature of Apartments.com is that it allows an applicant’s screening report to be shared with other participating rentals on the site. The tenant's application can be used for up to ten (10) different listings and is valid within 30 days. While the screening reports are free to the landlord, applicants need to pay for their reports once they apply for your property on Apartments.com. This reduces the financial burden on landlords. However, landlords have the option to pay the application fee if they prefer. The applicant's data are also securely stored online so landlords can access it wherever they are. Apartments.com is also an all-in-one suite of property management tools that make the rental process paperless and more convenient for landlords and renters. Aside from screening tenants, Apartments.com allows you to list your property, receive applications, generate a lease, collect payments, manage residents, organize expenses, and track maintenance from anywhere with a reliable internet connection. Additional Apartments.com Features Auto-tenant screening: get detailed renter information, including income-to-rent-ratio, employment status, household info, and rental history, once applicants submit their application through your Apartments.com listing Property listings and virtual tours: list your properties on Apartment.com and conduct property tours online and from anywhere Online lease agreements: creating state-compliant online lease agreements customized to your locale; both you and the tenants can sign the lease documents with an e-Signature and access documents online Resident management: keep and access all of your tenants' relevant information securely in one centralized location; share documents with tenants online Expense tracking: organize, track, and export your rental property expenses from anywhere to make tax preparation easier Maintenance requests: receive and manage maintenance requests directly from tenants on your online dashboard Apartments.com Customer Feedback Apartments.com received mixed reviews, giving it an average 3.9 out of 5-star review. Loyal customers who have been using Apartments.com for several years love the platform for its rental advertising and online rental collection features. A landlord also appreciated that Apartments.com allows interested tenants and existing renters to communicate with them directly by sending messages and requests on the platform. Some landlords complained of expensive premium rental advertising. A customer also found the platform's back-end "cumbersome to make corrections or changes to a listing." Furthermore, property managers are currently unable to utilize the mobile app, which means they have to log in to their accounts through a web browser to update and maintain listings. If you’re looking for a free tenant screening service with a mobile app, check out and . Apartments.com Pricing tenant screening feature is free for landlords. Applicants, however, have to pay $29 (plus tax) for their application and screening reports. The application is reusable, and screening reports can be shared with up to ten (10) participating Apartments.com landlords for 30 days. TurboTenant: Best Free Tenant Screening Services & Free Rental Advertising For property managers looking for free property management software, gives you a complete snapshot of a prospective tenant's financial stability and credibility through a quick and easy tenant screening process at no cost to you. In partnership with TransUnion, landlords can run a comprehensive credit report that includes debt payment history, new loans, history of bankruptcies, and even late payments in their rental history. TurboTenant also helps you gain insights into their previous rentals and landlords, as well as verify their income and employment. The software searches over millions of criminal records across the country, so you know if an applicant might pose any threat to your business and other tenants. Furthermore, landlords will get a detailed report of past evictions of a would-be renter. Aside from tenant screening, TurboTenant helps landlords stay organized through its other property management features, including rental marketing, lease agreements, document management, rent collection, maintenance requests, and expense tracking. These features are free to use for landlords, with premium upgrades available. Additional TurboTenant Features Rental advertising: advertise properties for free on multiple rental listing websites like Realtor.com, ApartmentList, Rent.com, and Craigslist; create professional listing pages for your properties Lease agreements: customize a state-specific online lease agreement crafted by local lawyers and expert landlords Rent payments: securely collect rent online, connect your bank account, and set up automatic monthly charges and late fees Maintenance requests: manage and keep track of tenant requests online Expense tracking: organize and monitor your expenses in a purpose-built software and export them as a CSV file when filing taxes TurboTenant Customer Feedback TurboTenant's customers love the platform because of its free features with upgrade options and responsive support staff. Another customer loved its all-in-one property management solution that enables them to advertise their properties across multiple sites, communicate with potential tenants, pre-screen and screen applicants, and accept applications. On the other hand, some customers complained of having issues with their accounts, like suddenly blocked or suspended accounts. Others also don't like the long period of time it takes for their tenants' rents to be deposited in their bank accounts. TurboTenant’s screening fees can also be more expensive than others on this list. Because of these mixed reviews, TurboTenant received a 3.7 out of 5-star review. For more affordable options, check out , , or . TurboTenant Pricing Using tenant screening feature is free for landlords, although tenants have to pay $55, which covers the application fee and tenant screening reports. You can choose to pay the fee yourself if you prefer or if you’ve already collected an application fee from the applicant. TurboTenant also has free and premium subscription plans that give you access to multiple property management features. Free Plan: free; includes unlimited properties, rental advertising, lead management, applications and screening, automated reference checks, rent payment, expense tracking, maintenance requests, messaging, document management, chat support, and one connected bank account Premium Plan: $4.92 monthly; includes everything in the Free Plan plus expedited rent payouts, connected bank accounts, state-specific lease agreements, lease addendums, e-signatures, and landlords forms pack LeaseRunner: Best for Its Ala Carte Tenant Screening Reports For independent landlords managing a few rental properties, is a practical choice because of its flexible pricing and ala carte tenant screening menu. LeaseRunner has no subscription and monthly fees. Instead, you can choose the type of service you want. This allows you to mix and match tenant screening reports based on your preference, local rental market, and ideal renter's profile, and pay only for what you really need. For example, you can request a criminal background check but not a credit check, or vice versa. LeaseRunner has an extensive selection of screening services, including tenant criminal background, credit record, financial profile, and eviction history reports. It has advanced applicant record matching and compares over 36 million eviction records, 300 million credit records, 500 million criminal records, as well as credit, court, government, and bank data. LeaseRunner also has other features that help landlords automate their rental processes. It offers free rental application form templates, paperless state-specific lease agreements with e-signatures, ACH (Automated Clearing House) online rent collection, and rental ad tools. The platform also has 5,400 bank integrations. What's more, LeaseRunner is fully optimized for mobile use and is compliant with Fair Housing Act making it a convenient and secure property management platform for small landlords. Additional LeaseRunner Features Applicant authorization: applicants can authorize the release of their credit, financial, eviction, and criminal records from their email and don’t need to create a LeaseRunner account or go to the website. Rental ads: post rental listings to multiple sites like Facebook, Twitter, and Craigslist and generate application buttons and links Digital rental application: email the application link to tenants so they can apply online or via smartphone Digital lease with e-signature: compile multiple documents and email them for e-signature Online rent payment: collect rent and fees by bank debit through the Tenant Payment Center or autopay LeaseRunner Customer Feedback Landlords who use like the platform for its inexpensive and easy-to-use features, giving it a 4.6 out of 5-star review. One customer even commented that it is "the easiest tenant application and screening process for landlords." Another praised the platform because it made listing, creating, and signing leases easy. A loyal customer of ten (10) years particularly liked that LeaseRunner allows tenants to accomplish an application for free and conduct the background and credit check separately if they decide to move forward. While customers find the platform useful, one customer commented on LeaseRunner's "buggy" software. Another landlord complained of receiving incomplete information on an applicant's credit score and financial profile. Further, LeaseRunner does not offer packages, and the total cost of its complete tenant screening report can be more expensive than other tenant screening services. If you’re an independent landlord with few properties, you can check monthly free and affordable subscription plans. LeaseRunner Pricing can provide you with detailed tenant reports at competitive rates. Unlike other tenant screening services on this list, landlords can choose to only pay for individual background reports for $10. However, if you need complete tenant screening information, the costs would amount to $60, which is more expensive than other services. Below are the prices of each type of tenant screening report: Credit report: $21 Criminal report: $16 Financial profile: $10 Eviction report: $13 How We Evaluated the Top Tenant Screening Services To determine the best tenant screening services, we evaluated platforms based on features related to comprehensive and reliable background checks and identity verification. The pricing structures were also compared, so property managers and landlords know which service is right for their budget. We also reviewed each platform’s ease of use and available customer support, which are essential to successfully screen tenants in the most efficient way possible. Based on our evaluation, is the best tenant background check company that provides comprehensive tenant screening reports at more affordable rates than others. Landlords can easily run a renter’s check, including credit history, criminal background, and eviction report, from anywhere with an internet connection. Buildium also provides an all-in-one property management solution with features like online rental listings and marketing, real estate accounting, rent collection, and maintenance requests. Below are the criteria we used to determine the top tenant screening companies for landlords and property managers.