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if you’re in your 20’s or 30’s and looking to invest in rental properties but aren’t a pro at home repairs, don’t worry, real estate investing can still be an excellent avenue for building wealth even if you can’t gut a house like Chip and Joanna Gaines. And unlike the advice you see on Instagram or TikTok, you don’t need to find deals off-market or drive for dollars. Zillow is a fantastic tool for finding rental properties that not only attract quality tenants quickly but also have long-term appreciation potential. Here’s how to navigate Zillow like a pro and avoid potential pitfalls, even if you’re not handy or working with a contracting team.
1. Focus on “Turnkey” or Move-in-Ready Properties
As someone who isn’t looking to get their hands dirty with heavy renovations, you’ll want to prioritize move-in-ready or “turnkey” properties. These are homes that require little to no repairs or upgrades. Look for listings that explicitly state recent renovations, updated appliances, and modern features. The less work required upfront, the quicker you can get tenants in, which means cash flow starts sooner. Note: It’s a bonus if the pictures are not great. Bad pictures keep potential buyers away, so appreciate a bad photo for what it is, and see beyond the poor picture taking.
2. Location, Location, Location
The importance of location can’t be overstated. Look for properties in neighborhoods with strong demand for rentals, such as those near universities, hospitals, corporate offices, or look at properties on walkable streets near cafes and other local shops. Zillow’s neighborhood data can provide insights into school ratings, crime rates, walkability, and proximity to amenities like grocery stores and public transportation. Choose areas where rent prices are stable or increasing. A desirable location not only helps you find tenants faster but also increases your property’s value over time.
3. Analyze Rental Demand and Rates
Zillow’s rental estimate feature (“Zestimate”) gives you a ballpark figure of how much rent you can charge, but don’t take this number as a source of truth. Make sure to run a rental search on Zillow that shows properties sold and listed. This way you can see what rate the property has been rented for, and you can see what current rental listings are trying to get rented for. Look for properties where the monthly rent can cover your mortgage, property taxes, and other expenses with room for profit. Don’t forget to include cost for vacancy (which is the amount of days that the property is not rented). Keep in mind that with elevated interest rates, it may be difficult to cover all of your costs if you are mortgaging the property. This is why it’s important to run a rental calculator to see when you may be able to break even and turn a profit, and/or if the property will appreciate at a faster rate to compensate for the lower rent. I use this calculator to calculate my ROI from different rental properties. Become best friends with this calculator!
When you’re not handy, it’s best to avoid properties that come with potential maintenance headaches. For example, older homes might have charm, but they can also hide expensive repairs like outdated plumbing or electrical systems. Opt for properties that were built in the last 20-30 years or that have undergone recent upgrades to major systems (HVAC, roofing, etc.). This reduces the likelihood of emergency repairs and keeps your maintenance costs low. The types of repairs you want to do should be limited to: paint, tiling, adding or removing interior walls,
5. HOA and Property Management Considerations
Some properties, especially condos or homes in planned communities, may have a homeowners association (HOA). While these fees can seem like an extra cost, an HOA often takes care of exterior maintenance, landscaping, and shared amenities, saving you time and effort. If you’re not interested in dealing with tenant issues directly, consider working with a property management company that can handle day-to-day operations for you. But keep in mind that HOA’s do eat into your profitability, and they tend to reduce the appreciation of your properties value, especially if they are higher than $300 / month. Try to keep the HOA as moderate as possible.
6. Future Appreciation Potential
While cash flow is critical, you also want your property to appreciate over time. Look for areas that are experiencing growth, such as new commercial developments, infrastructure projects, or population increases. Additionally, neighborhoods with great schools are in higher and higher demand, especially as property taxes increase in many areas and private school tuition increases. Zillow can help track trends in home values, and investing in up-and-coming neighborhoods can lead to significant gains in property value over time.
In Summary
You don’t need to be a contractor to make smart real estate investments. By using Zillow’s tools effectively, focusing on close-to-move-in-ready properties in desirable locations, and carefully analyzing rental demand and appreciation potential, you can find rental properties that attract great tenants and increase in value. Real estate investing is a powerful way to build long-term wealth, even for those without a knack for fixing things.
Let me know how I can help. Do you have a deal you want advice on? Do you plan on doing some reno work but are unsure about the budget? Let’s talk!
