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Breaking Down Today’s Commercial Real Estate Market & Trends

The commercial real estate market, not unlike the single-family housing and residential markets, is subject to cyclical trends. Investors are constantly looking for how these trends might affect their individual markets for the foreseeable future and ask themselves: what are the best real estate markets for commercial investments? These ever-changing trends and their impact are what drives an investor’s strategy on how they will edge out their competition. To better understand the current and upcoming commercial real estate market trends, it’s also important to review the trends that brought us to today.

Understanding Today’s Commercial Real Estate Market

The real estate market has proven to be a reliable and successful wealth-building tool for investors in recent years and is expected to continue its growth in 2022. 

At the beginning and peak of the COVID-19 crisis, experts and professionals alike were concerned about the short and long-term effects on the real estate market. The pandemic undeniably impacted the economy on many levels. However, the real estate market continued to move without slowing down. 

The pandemic did force commercial space occupants to adapt quickly, but COVID-19 statistics are improving and businesses are resuming to operate normally. Many businesses had to take new health policies into account before requiring in-office work. Some businesses continue to adapt and implement work from home or partial work from home policies successfully. Demand for office space have risen again as businesses who prefer to work face to face have been cleared to do so. 

Commercial real estate agents can also expect demand for a restructured design of office spaces. Some commercial landlords may find that changing their buildings to accommodate more space or privacy between employees will prove an attractive quality to prospective tenants. 

Although the changes that the COVID-19 pandemic has caused have been challenging for the commercial real estate industry, the quick return to commercial spaces has proven encouraging. As the economy recovers and workplaces adapt to changing public health practices, the commercial industry is expected to remain strong.

Real Estate Trends & Predictions For 2022

Many experts are eyeing the real estate industry to see what will happen in the year ahead. A brief review of previous years might suggest that while predictions can be useful in planning, they are not entirely accurate. For example, at the start of 2020 many would never have guessed the biggest driving factor in the market would be the COVID-19 pandemic. As we head into 2022, the effects of the pandemic continue to drive several changing trends in real estate including an emphasis on e-commerce, upgraded rental properties, and inventory shortages. 

Real estate investors should keep an eye on the return to retail spaces. While the conversation around e-commerce has continued to suggest an end to brick-and-mortar stores, this is simply not the case. Many individuals, in light of eased COVID-19 restrictions, still want to attend restaurants, shop, and spend time in commercial retail spaces. With the exception of possible vaccine and mask mandates, many commercial areas are open for business as usual and investors should expect that trend to continue. 

Professionals across the industry have been anxiously waiting to see how many companies continue work from home policies in the future, and the answer is still unclear. What we do know is that many top companies still want employees back in the office — promising news for commercial spaces. Note that the decision to work from home vs. return to the office is very divided by industry (for example, Tech seems to be leading the work from home push). Investors interested in office spaces should consider possible tenants and which spaces would be best for these businesses. 

A few other trends to consider in the year ahead include the recovery of multifamily rental units and a shortage of housing inventory. Investors may find they are able to keep vacancies low in the year ahead with single-family and multifamily rental units. On a final note, investors should keep an eye out for state and federal plans to improve infrastructure across the country. These changes could greatly increase the accessibility of commercial spaces and increase demand from tenants. 

2022 is expected to be an interesting year for real estate market trends. Investors should keep an eye on both residential and commercial trends to stay informed about the year ahead. For those looking for new markets to watch, here are the top 10 markets to pay attention to in the year ahead: 

Real Estate Trends & Predictions For 2021

Commercial real estate was expected to face some interesting challenges throughout 2021. Most notably regarding the future of remote work and office buildings. With a large portion of the workforce remote due to COVID-19, many investors questioned the future of office buildings and long-term commercial leases. These concerns were heightened as big-name tech companies announced employees would be able to work from home permanently. Many expected
office buildings to reopen as the vaccine is distributed across the country and the economy returns to normal. 

While office spaces were expected to bounce back, so to speak — 2021 saw a rise in something called “dark stores.” Dark stores refer to retail outlets or distribution centers that have shut down inside operations and instead allow for curbside pickup or shipping. Dark stores were used before the COVID-19 pandemic, but as expected, they increased in size and demand as restrictions were put in place on in-person shopping and dining. Real estate investors hoping to tap into this trend today should look for properties that are easily accessible and in popular market areas. 

Warehouses represented another promising commercial property type for 2021. The demand for warehouses increased dramatically as retailers attempted to keep up with the rise in e-commerce. Real estate investors can expect the property value of warehouses and other industrial property types to continue to increase in the years ahead. Owners can not only benefit from property appreciation but an increase in average rent prices for these spaces. 

Unfortunately, not all areas of commercial real estate were expected to thrive as the world continues to feel the effects of the pandemic. Investors were warned to be wary of hotels and other areas of hospitality-related real estate. These industries are expected to recover at much slower rates than others, particularly in dense cities. Investors who are eager to find opportunities in hotels should be sure to focus on markets that are recovering more quickly than others. 

There are a few real estate markets that are expected to stand out in the year ahead as a result of job growth, cost of living, and population increase. Here are some of the top growing commercial real estate markets from 2021: 

Real Estate Trends & Predictions For 2020

When 2020 began, many industry experts predicted sustainable but slow growth across the commercial real estate market. Experts predicted the impact of changing demographic trends, as both Baby Boomers and Millennials’ preferences changed regarding housing, office, and other properties. 

With the U.S. experiencing its longest expansion in history, many believed the slow and steady growth would continue in 2020. At the start of the year, mortgage rates were at 3.75%, according to Freddie Mac. This was nearly a 1% difference from the monthly average just a year ago. At the end of 2019, this drop in rates was the cause of a surge in refinancing and purchase activity. Among experts, there was a consensus that rates will remain low in 2020, somewhere between 3.7% and 3.9% 

Due to high demand, prices for homes were predicted to continue their climb upward. Home prices were estimated to rise by 5.6% by Fall 2020. This is an increase of about 2.1% from last year. With more and more listings coming on the market, there will be much more competition starting in early 2020. On the lower price end, low-interest rates and a shortage of entry-level homes will cause prices to rise even more. The shortage of entry-level homes is due to builders tending to focus more on higher-end, higher-profit homes.

Housing inventory was predicted to remain limited for most of 2020 due to interest rates and record-high homeownership tenures. According to Redfin, homeowners stay in their homes for an average of 13 years or higher, a 5-year increase from 2010. Homeownership tenure in some cities goes as high as 23 years. Essentially, you can’t buy what’s not for sale. Even with historically low rates, potential buyers risk buying in a market with a supply shortage. This trend was predicted to continue through 2020 and may even intensify in the coming years, directly affecting commercial real estate as a result. A bit of relief to this situation may come with the projected increase in construction. According to the Census Bureau report, both building permits and housing starts have increased over the year. Realistically, the pace of building is still behind historical standards, meaning it may take months before the pace can support the higher demand.

According to Realtor.com, Millennials were a significant 46% of all mortgage originations in September 2019. This was no surprise as many Millennials regard homeownership very highly in their life goals, even higher than getting married or having children. The combination of low-interest rates and higher incomes urged more and more Millennials to close deals on homes. A problem they face comes from the Baby Boomer generation. Many of this group choose to stay in place, resulting in more homes being kept off the market. As Millennials get older, many of them will move from urban to suburban areas. Although, they yearn for a community that can imitate the lifestyle of a lively city. This trend is drawing Millennials toward affordable suburban homes on the outside of major cities. As cities like New York and San Francisco become increasingly expensive, younger families populate the small towns outside major urban areas.

These commercial real estate trends give rise to the growth of a number of cities in the coming year. The best commercial real estate markets for overall investment and development in 2020 include:

  • Austin
  • Raleigh/Durham
  • Nashville
  • Charlotte
  • Boston
  • Dallas/Fort Worth
  • Orlando
  • Atlanta
  • Los Angeles
  • Seattle
  • Tampa/St. Petersburg

These cities are the top commercial real estate markets in terms of population growth and net migration. Larger metros, such as Los Angeles and Boston, are projected to have slower population growth but will continue to be highly sought-after real estate markets that will continue to attract capital. 



Real Estate Trends & Predictions For 2019

Released jointly by the Urban Land Institute and PwC, the annual Emerging Trends In Real Estate report highlighted a theme of unpredictability for 2019. Researchers stated that simply “connecting the dots” will no longer work and that this will be a “new era that will demand new thinking.”

The report also posited that 2019 would lend itself to overlapping trends, with the intersectionalities themselves leading to new conditions. For example, researchers postulated whether or not the technology used to improve productivity and efficiency would accelerate the industry’s downsizing. Investors were advised to prepare to be surprised in any way possible, which was great for spurring innovation and creativity within the industry. 

The following covers the top commercial real estate trends and predictions for 2019, as well as a review of the trends in preceding years. Federal officials have hinted that they will continue boosting interest rates to moderate inflation and stabilize the economy. The Federal Reserve hiked rates three times in 2018, between 2 and 2.25 percent. According to Curbed, the slowdown of economic growth will impact the real estate sector, especially in emerging markets. As real estate activity slows, investors will have a tougher time identifying new deals.

In 2018, much of the commercial market’s attention was focused on the compression of the retail industry. CBRE Head of Industrial Research, David Egan, predicted that the shift in demand from traditional retail to industrial real estate will continue. As large retailers focused on e-commerce, the demand for warehouse, shipping, and logistics spaces continued. This was especially true as more and more traditional retailers entered the online space. According to Bisnow, however, the retail industry is not dead. Instead, experts believed retailers would focus on delivering omnichannel shopping experiences, while e-commerce retailers would start opening physical store locations. (Amazon Books is an example of the latter.) Experts also warned investors would need to spend more time supporting the efficient use of commercial space. Retailers were predicted to seek out better (not bigger) brick-and-mortar presences.

Another trend highlighted in 2018, expected to continue in 2019, was the growing number of millennials flocking to secondary and suburban markets. According to the U.S. Census Bureau, 2.6 million Americans moved from cities to suburbs in both 2017 and 2018. Experts believed this mass exodus occurred as millennials opted for larger, more affordable housing in suburbs when starting families. Neighborhoods that were walkable, transit-oriented, and have strong school systems attracted the most newcomers. This trend was of interest to commercial investors; with migration patterns leading to a spike in demand for retail development and employment centers. Multifamily developments experienced “amenity creep,” or a need to provide increased, high-end amenities to attract sophisticated renters and buyers.

Technology was also expected to play a big role in 2019. According to Curbed, industry-specific technology is changing the way real estate professionals do business. For example, there was been a boom in building and construction technology and a push for better, more transparent analytics reporting. Experts were also excited to see how machine learning and other emerging technologies could improve building management, organization, and design. The Urban Land Institute reported increased use of artificial intelligence in assets such as co-working spaces and smart buildings. Uses included building efficiency, safety, and security, as well as property access.

Amidst all these demographic and technology shifts, the Emerging Trends In Real Estate survey reported that construction costs topped the list of concerns for investors and developers. A decline in immigrant construction labor, superstorms leading to rebuilding efforts, and international trade wars were factors squeezing construction costs across the nation.

Finally, the commercial investing community gained a renewed focus on sustainability due to serious reports on climate change. Many investors turned to impact investing, making green practices a core part of their businesses. Keep reading to get an overview of the top commercial real estate trends from 2018 to better understand what factors contributed to these trends.

6 Trends Affecting The Commercial Real Estate Market

If you’re interested in getting your start in commercial investing, then you’ll definitely want to familiarize yourself with the trends and factors that influence commercial real estate market trends. Take some guesses on what kind of factors might attract new businesses and help certain markets boom. Did you guess any of the following trends correctly?
Commercial growth: Directly impacting job growth, the movement of major companies and sector-based growth can all lead to demand for commercial spaces and housing.

  • Development: The urban development of city centers, business districts and public-private projects each affect the attractiveness of a market for commercial real estate tenants.
  • Cost of business: The cost of conducting business will influence how companies move in and out of certain markets. Cities with relatively lower costs of conducting business are more likely to attract new businesses and employment.
  • Infrastructure: Public infrastructure, including public transit, communication, electric and transportation systems all influence the ease of doing business in a market. Cities with continued infrastructure improvements are more likely to attract and retain residents, businesses and tourists.
  • Housing: Local real estate prices, rental affordability, and housing options are all factors that contribute to the migration patterns of workers. For example, a major company may be influenced by their decision of where to move their new headquarters, based on the overall cost of living for their employees.
  • Quality of life: Urban, walkable cities with plenty of public transit, parks, good schools, and entertainment all contribute to the general quality of life for residents. Great quality of life is important considerations for businesses and their employees.
  • Tourism: The tourism industry presents many opportunities for commercial real estate to boom, such as hotels or airports.

How To Determine The Best Places To Buy Commercial Real Estate

Curious about which commercial real estate markets are best for getting started? It’s important to keep a few priority items in mind. Although there will always be variances, commercial markets that embody the following five criteria are known to offer the best returns for investors:

  • Low Unemployment Rates: Cities that have a low or decreasing unemployment rate indicate a robust job market, with a probable demand for office and retail spaces.
  • Low Purchase Prices: This might sound like a no-brainer, but it is important to find a property that is priced either below or at market value. If you want to profit off your renters, consider finding a slightly distressed property that is being sold for a deal. There is also the option to buy a commercial foreclosure property.
  • High Asking Rents: Be sure to do your due diligence before jumping into commercial real estate and research comparable markets to see what average asking rent prices are. If the asking rent rate is high, and your purchase price is low, you should make a substantial profit.
  • High Tenant Demand: Search for up-and-coming markets that are creating new jobs and developing new residential complexes because there will be an increased demand for space.
  • Low Vacancy Rates: If you have high tenant demand coupled with low vacancy rates, you will be able to charge a higher rent price, therefore increasing your profits.
  • Favorable Conditions For Business: Pay attention to local and regional economic policy. Are new plans attracting businesses to the area? Review the tax rates for business owners and economic growth as indicators.

Top 10 Fastest Growing Commercial Real Estate Markets

There are four different types of commercial real estate spaces investors can consider: retail, office, industrial, and multifamily complexes. If you’re looking to invest on a budget, experts recommend starting with either industrial spaces or multifamily complexes, as those options tend to have lower price points than retail and office spaces.

If you think you’re ready to make the jump into commercial real estate, consider these rapidly developing markets, which are arguably the best places to buy commercial real estate right now:

Summary

Although predicting the future of the commercial real estate market might seem like a job for economists and top-rate experts, the truth is that any investor can make their own educated guesses. As shown in this discussion, market trends are extremely interconnected from year to year. All you have to do is study up on market outcomes from previous years, as well as have an understanding of the economic drivers that impact the current commercial market. Investors who take the initiative to perform their own research and make educated predictions will be the ones who beat their competition and find the answer to: what are the best real estate markets for commercial investments?

Mortgage Loans: Unlocking Homeownership

Dreaming of homeownership? A mortgage loan can help you turn that dream into a reality. In this edition, we’re excited to explore the world of mortgage loans and how they can empower you to purchase your dream home. Let’s dive in!

Understanding Mortgage Basics:

Begin by familiarizing yourself with the different types of mortgage loans available. Research fixed-rate mortgages, where the interest rate remains constant throughout the loan term, providing stability in your monthly payments. Alternatively, explore adjustable-rate mortgages, which offer a lower initial interest rate that may adjust periodically based on market conditions. Understanding these options will help you make an informed decision when selecting a mortgage.

Building a Strong Credit Score:

A good credit score is essential when applying for a mortgage loan. Take steps to improve your credit score to access more favorable loan options. Pay your bills on time, reduce your overall debt, and keep your credit utilization ratio low. Regularly check your credit report for errors and address any discrepancies promptly. A strong credit score can lead to better interest rates and terms, potentially saving you thousands of dollars over the life of your loan.

Exploring First-Time Homebuyer Programs:

If you’re a first-time homebuyer, explore special programs and incentives designed to assist you in the homeownership journey. Many regions offer down payment assistance programs, reduced interest rates, or educational resources to help you navigate the process. Research what options are available in your area and determine if you qualify for any of these programs. They can significantly ease the financial burden of buying your first home.

Saving for a Down Payment:

Start saving for a down payment as early as possible. A larger down payment can result in a lower loan amount, lower monthly payments, and potentially better interest rates. Review your budget and identify areas where you can cut back to allocate more funds toward your down payment. Consider automating your savings by setting up a separate account dedicated to your homeownership goal. Additionally, explore alternative down payment options, such as government assistance programs or grants.

Getting Pre-Approved:

Before house hunting, consider getting pre-approved for a mortgage loan. This process involves submitting your financial documents to a lender who will assess your financial situation and provide an estimate of the loan amount you qualify for. Pre-approval demonstrates your seriousness as a buyer and can give you a competitive edge when making an offer on a home.

Remember, buying a home is a significant financial decision, and taking the time to educate yourself about mortgage loans is crucial. By understanding mortgage basics, building a strong credit score, exploring first-time homebuyer programs, saving for a down payment, and getting pre-approved, you’ll be well-equipped to embark on your homeownership journey. Stay tuned for more insights and guidance on homeownership in our upcoming newsletters.

Wishing you success on your homeownership journey!

Millennial’s Guide To Investing In Real Estate At Young Age

Millennials are predicted to make up a large proportion of homebuyers in the coming years, but their impact on the real estate industry will not stop there. Millennials will also make up the next generation of real estate investors. While investing in real estate young may seem challenging, it is not impossible.

Aspiring investors should know that there are just as many solutions for real estate investing as there are challenges. Learning how to invest in real estate young will take time and research, but young investors can set themselves up for lifelong success with the right preparation. Keep reading to learn how to break into real estate at a young age.

Why You Should Start Investing At A Young Age

There are numerous benefits available to those who start investing at a young age. Perhaps most importantly is the opportunity to start on what would become a lifelong passion. Historically, real estate has proven to be a highly lucrative investment option. Those who take the time to learn about investing early can create the foundation for a worthwhile, profitable career in life.

David Wurst from Webcitz offers this insight: “real estate investing isn’t just for folks of a specific age. You can begin when you are young or when you are older. In either case, the goal is to weigh your options and choose which ones best match your risk tolerance and time commitment. But know this: Real estate can be a profitable investment for retirees, and if you missed out during your working years, it’s never too late to get in on the fun”. 

While you can start investing in real estate at any age, there are certain perks Millennials can bring to the table. For example, this generation grew up in a world surrounded by new technology. Considering all of the changes in the real estate industry today, a knack for technology could help young investors succeed early on. Read this article to more about the future of real estate technology.

Young investors will often also have a higher degree of flexibility when choosing an investing strategy. For example, investors in their 20’s and 30’s may have more free time and a willingness to try alternative investments. This can open the door to unique opportunities, like house hacking, that may not be attractive options later on. Finance expert Samantha Hawrylack adds that “millennials are less likely to feel tied to traditional investment strategies and are more open to new ideas. This can give them an edge when it comes to finding innovative ways to grow their money”.

Aspiring investors should remember to use age to their advantage and test out multiple exit strategies, markets, and even property types.

When it comes to purchasing properties, starting early provides the chance to build equity over time. If you buy a home now, ten or twenty years down the road, you’ve likely built up significant equity through loan payments and property appreciation. By investing in properties now, young entrepreneurs have the chance to build up significant equity. This can pave the way to impressive, high-value portfolios over time.

Yet another benefit of investing at a young age is the chance to build up a network that will last a lifetime. Your network will be crucial to securing financing, finding contractors, and landing deals in real estate. Young investors ready to hit the ground running can start building connections that will benefit them throughout life.

All in all, there is a multitude of benefits available to those who break into real estate, investing young. While you can start at any age, young investors have the chance to lay the groundwork for a successful investing career.

Challenges Of Being A Young Real Estate Investor

Before committing to your first investment, it is important to consider the challenges you may face along the way as a young investor. By familiarizing yourself with the potential obstacles, you can help make sure you are prepared for any potential obstacles. Here are some of the challenges of being a young real estate investor (and how to overcome them):

  • Turning A Hobby Into A Business: While it may sound obvious at first, it’s important for investors to treat their new business like the business it is. Consequently, far too many new investors treat their first venture into entrepreneurship like a hobby. According to Ann Martin, Director of Operations of Credit Donkey Credit Card Processing, new investors must learn to treat their investments like a business. “By taking your real estate investments seriously, you’ll help ensure good returns,” says Martin.
  • Lack Of Resources: Many young investors blame their inability to get started on a lack of resources. Some even report finding opportunities but complain they don’t have the money to take advantage of them. Others are too afraid to get started because they think they need more money. If you don’t get started, you won’t have any more than you do now. And there really are ways to invest in real estate with no money down. It’s just a matter of learning the right strategies and tactics. Have you considered a private money lender? Truth be told, a lack of capital should never be an excuse with all that is available out there. You need to know where to look and be prepared when an opportunity presents itself.
  • Not Being Taken Seriously: While youth is frequently considered a strong asset in business, many young entrepreneurs fear they won’t be taken seriously. Unfortunately, it is a legitimate fear, but not one that can’t be worked around. Know that there are many circles in which others are specifically looking for those that are 30 and under. Opportunities are there for younger investors, but you need to be willing to put in the time to gain experience. Let your hard work be your resume. It also wouldn’t hurt to hire a veteran mentor or to partner up with a more experienced investor.
  • Self-Doubt: Everyone that considers doing something different runs into the fear that they are insane for believing they can do it or should try it. Such feelings often sneak in right before the leap is made or after the initial excitement begins to wear off. Recognize that this is a way your brain sabotages you into inaction. Those in the business call it analysis paralysis. Don’t let this happen to you. Anticipate it, and realize the need to work through it to see results.
  • The Process: If you haven’t been through the real estate transaction process yet, buy a home. Owning your own home creates a great financial foundation and will kick start your investing. It will also teach you a ton about the process of investing purely for profit.
  • Lack Of Established Credit: Younger real estate investors often have to face the reality that they don’t have well-established credit. Maybe you are fresh out of school, still in school, or have just been strict about paying cash for everything. Credit can play a role in some types of investing and in business. However, you don’t need great credit or any credit to get started investing in property. Don’t let this excuse rob you of your potential.
  • Student Loan Debt: Whether you are in college, fresh out, or dropped out for real estate purposes, there is a good chance you’re carrying some student debt. It is important to recognize that it can throw a wrench in your debt-to-income ratio, but there may be no faster way to pay off that debt than real estate investing.
  • Expectations: Buying and flipping houses is often made to appear very easy. However, it is easier said than done. New investors will quickly learn that they need to start marketing for deals, learn how to evaluate properties, and write offers. Some expect to be doing a dozen deals a month right out of the gate. Money can come fast and easy in real estate, but it can take some time to build up a pipeline and close deals. The better you understand what’s really involved in getting a deal and what realistic volume is, the faster success will come.
  • Connections & Relationships: One of the myths about the wealthy one percent is that they were born with money and connections. Some are, but there are even more millionaires and highly successful real estate players that have worked their way up from the bottom. Connections and relationships are some of the easiest things to build. You may need to learn or hone some communication and rapport-building skills, but nothing is stopping you from getting out there and making new contacts today. Build contacts, and you will be surprised at where some of them end up taking your business.
  • Finding Customers: Stop looking for people to sell to, or for deals to fall into your lap. Start looking for as many people as possible to help with their real estate and finance problems, and everything else will fall into place.
  • The What’s Next Trap: If you keep getting stuck on what you need to do next, you’ve skipped the most important step in getting into real estate investing: a business plan. Create a system that works for you, one that is tailored to your goals. Use it as a reference when you get stuck.
  • How To Invest In Real Estate At A Young Age
  • Many young investors will find it challenging to raise financing when they first start; however, this should not signal the end of the road. The key to investing at a young age will be learning how to leverage your time, motivation, and capital you have to your advantage. While it may seem difficult, finding success as a young investor will come down to learning the best ways to work with what you have.
  • Luckily, several investing strategies are well suited to young investors. As you gain experience (and connections), the best part is you can use the profits from these strategies to continue building an investment portfolio. Beginner-friendly exit strategies can serve as an excellent gateway to more complex investments down the line. Here are three strategies to get you started:
  • House Hacking
  • Multifamily Rental Property
  • Wholesaling
  • House Hacking
  • House hacking refers to renting out a room in the property you are already living in. For example, if you have a second bedroom or converted garage space, you could use those rooms to generate monthly rental income. This strategy is a great way to supplement your income without purchasing a property for yourself. House hacking can also be a great way to reduce your overall living costs, as you may be able to split living expenses other than rent with your tenant.
  • There are a few things to keep in mind before house hacking, like understanding how to be a landlord and setting tenant boundaries. While this is a great way to generate rental income, the situation will involve taking on a roommate. Make sure you are ready to share communal spaces and manage a tenant before you list the space. If you are interested in getting started, read our ultimate guide to house hacking to learn more.
  • Multifamily Rental Property
  • Multifamily rental properties can be another great option for those wondering how to invest in real estate at a young age. This strategy involves purchasing a multifamily property and living in one unit while renting out the rest. This can be a great option for investors who like the benefits of house hacking but not the idea of an actual roommate. That being said, multifamily properties offer shared maintenance costs, steady cash flow, and in some cases, better financing when compared to single-family homes.
  • There are several types of multifamily properties investors can look into. These include duplexes, townhouses, and even small apartment complexes. You should learn how to evaluate different markets, potential cash flow, and financing sources to get started. If you play your cards right, multifamily rental properties can turn out to be highly lucrative for young investors.
  • Wholesaling
  • Wholesaling refers to finding properties, getting them under contract, and then assigning that contract to a buyer. Wholesalers will earn money through contract fees. This process does require a strong understanding of your market area and an ability to network effectively. However, it is a great strategy to learn a lot about real estate and fast.
  • This real estate exit strategy is actually where a lot of real estate investors get their starts. While wholesaling revolves around buying and selling houses, the wholesaler never actually purchases the property. Therefore, it does not require significant capital to get started. If you are interested in learning more about wholesaling, be sure to watch this video.
  • Increasing Income And Savings
  • If your goal is to increase your funds to begin investing, look for ways to increase your income in the meantime. For many people, this means starting a side hustle. Successful side hustles range from selling photography, to working online as a virtual assistant, to delivering Postmates. You may also be eligible for a promotion at your current job, and can negotiate a raise. 
  • Once you are able to increase your income, treat the extra amount as savings. Set aside this money as you get paid. Gradually, you will build up enough cash for your first investment. From there, you can keep growing your funds and so on. 
  • [ Learning how to invest in real estate doesn’t have to be hard! Our online real estate investing class has everything you need to shorten the learning curve and start investing in real estate in your area. ] 
  • Scaling & Networking
  • Perhaps one of the greatest benefits of investing young is that you have time to break into the industry at your own speed and lay the right groundwork for a successful career. Many new investors of all ages are hyper-focused on landing their first deal and securing their first property. While this is a monumental feat, it is not nearly as important as establishing the foundation for a future real estate business. Young investors should pay particular attention to creating a network and establishing strong business practices. 
  • A great place to start is getting a real estate mentor and joining networking groups around your area. Be consistent as you try to break into the industry and focus on building lasting relationships with other real estate professionals. This should include real estate agents, contractors, other investors, real estate brokers, and more. Networking is key to a successful career in real estate, and building an expansive network early will help you in more ways than one down the line. 
  • When it comes to your business, take extra care to develop your business plan and branding. Create core values and a mission statement for your company, and choose a business name that works for you. It can be a good idea to secure the social media handles and domain names, even if you are not at that stage yet. Remember that the work you are putting in now could greatly help you as your real estate business expands throughout your career. 
  • Partnering Up
  • Real estate business partnerships can be mutually beneficial for multiple reasons. A potential partner can bring financing solutions to the table as well as connections and experience. Partnering up with someone can help alleviate some of the stress and requirements of handling a business on your own. If you are running into obstacles that you do not think you can manage independently, this can be a great option for you and your business. 
  • Educate Yourself
  • Before you get started, one of the best ways to ensure your success is to spend time educating yourself. Frankly any investor continues educating themselves throughout their career; consider it a never-ending process. Not only does the real estate market trend over time, investing strategies and industry trends are in a constant state of change as well. There are plenty of free online resources, podcasts, books and expert blogs at your disposal so that you can start teaching yourself the ins and outs of the industry. 
  • Summary
  • Learning how to invest in real estate takes careful planning, no matter where you are in life. That’s why young entrepreneurs should not be scared away by the potential challenges of starting an investing career. Instead, learn to use your age to your advantage and start building a portfolio today. There are financing opportunities available, connections to be made, and numerous markets worth researching. Whether it is house hacking, rental properties, or wholesaling, there are several beginner-friendly entry points for young investors to break into real estate. With the right dedication, investing in real estate young can help you set yourself up for the life you want.
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6 Best Tenant Screening Services for Landlords

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:

  • BuildiumBest overall for its comprehensive tenant screening services at affordable rates
  • AvailIdeal for independent landlords who need free customizable screening reports and automated reference checks
  • RentRediBest mobile property management app for tenant screening
  • Apartments.comBest free property management platform with auto-tenant screening feature and shareable tenant screening reports
  • TurboTenant: Recommended for independent landlords looking for free tenant screening service and free rental advertising
  • LeaseRunnerGreat for small landlords who prefer flexible ala carte and individual tenant screening reports

Best Tenant Screening Services At a Glance

Tenant Screening ServicesTenant Screening PriceFree PlanMobile AppCustomer Support
$15 per screening for landlordsor$30 per screening for applicantsPhone, live chat, and email
Visit Buildium
Pricing varies per statePhone, live chat, and email
Visit Avail
$35 per applicationPhone, live chat, and email
Visit RentRedi
$29 per application✓App is best for tenantsPhone and email
Visit Apartments.com
$55 per applicationPhone, live chat, and email
Visit TurboTenant
$60 per complete applicationPhone and email
Visit LeaseRunner

See fullscreen table

Online tenant screening enables you to carefully filter applicants and find the best tenants faster through comprehensive credit history, eviction history, and criminal background reports. Take our quiz below to find the best tenant screening service for your rental business.

Buildium: Best Overall Tenant Screening Service

Buildium logo.

Overall Score: 5.00 / 5

What We Like

  • All-in-one property management solution
  • Supports multiple listing platforms
  • Tenant screening fees are more affordable than others on this list

  • No free plan
  • Expensive subscription rates
  • Phone support available in more expensive subscriptions
  • Website chat support is handled by a chatbot instead of a live person

Why should you choose Buildium?

Buildium is highly recommended for landlords with multiple properties of up to 5,000 units (or more). As a tenant screening service, Buildium helps you get access to comprehensive credit, criminal, and eviction history reports. Its tenant screening services are relatively cheaper than similar providers, especially when shouldered by the landlord.

Visit Buildium 

Buildium 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 TransUnion, 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 Buildium 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 Avail.

Buildium Pricing

Buildium 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.

Visit Buildium

Avail: Best Free Customizable Tenant Screening Service With Automated Reference Checks

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Avail logo

Overall Score: 4.88 / 5

What We Like

  • Option to pass on tenant screening fees to applicants
  • Comprehensive and customizable tenant screening reports
  • Applicant communication and message center available on the platform
  • Free subscription plan

  • No mobile app
  • Tenant screening fees may vary by location
  • Website chat support is handled by a chatbot instead of a live person

Why should you choose Avail?

Avail is best for small and mid-sized landlords looking for a free property management platform with affordable tenant screening services and automated reference checks. While tenant screening reports are not free, landlords can choose to pass on these fees to the applicant.

Visit Avail 

If you’re looking for free property management software with customizable renter reports, we recommend Avail. 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

Avail screening report sample.

Sample Tenant Screening Report (Source: Avail)

  • 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

Avail’s 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 RentRedi or Buildium.

Avail Pricing

Avail 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 $7 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

Visit Avail

RentRedi: Excellent for Mobile Tenant Screening Process

RentRedi logo

Overall Score: 4.82 / 5

What We Like

  • Auto-tenant screening feature
  • More affordable tenant screening service than other platforms
  • Multiple renewal subscription options
  • Free listings on Realtor.com and Doorsteps

  • No free trial and no free subscription plan
  • No tiered plans with ala carte features
  • No automated reference checks

Why should you choose RentRedi?

RentRedi is perfect for small to mid-sized landlords who are always on the go. With RentRedi’s robust mobile app, you can easily send tenant screening requests and have the applicant approve the request on their phone.

Visit RentRedi 

RentRedi 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 QuickBooks
  • 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 Realtor and Doorsteps 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 RentRedi 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 LeaseRunner.

RentRedi Pricing

Landlords can enjoy RentRedi’s 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

Visit RentRedi

Apartments.com: Recommended for Free Auto-tenant Screening Feature & Shareable Reports

Apartments.com logo

Overall Score: 4.73 / 5

What We Like

  • All-in-one property management platform with an auto-tenant screening feature
  • Comprehensive tenant screening reports
  • Screening reports are shareable up to 10 participating landlords

  • No mobile app features available for property managers
  • Subscription plans and premium pricing are not disclosed on the website
  • No live chat support

Why should you choose Apartments.com?

Apartments.com is ideal for independent landlords looking for free tenant screening services and free rent collection software. Once prospective tenants apply for your rental property, they will be required to pay an application fee, covering their credit, eviction, and criminal reports.

Visit Apartments.com 

If you need fast and easy access to tenant screening reports when an applicant clicks the “Apply” button on your listing, we recommend using Apartments.com. 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 RentRedi and TurboTenant.

Apartments.com Pricing

Apartments.com’s 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.

Visit Apartments.com

TurboTenant: Best Free Tenant Screening Services & Free Rental Advertising

TurboTenant logo

Overall Score: 4.10 / 5

What We Like

  • Free software version without trial limit
  • Comprehensive tenant screening reports
  • Past landlord references
  • Mobile app

  • No phone support available for free subscribers
  • Tenant application fee more expensive than other tenant screening services
  • Rental accounting feature available as an add-on service to any subscription plan

Why should you choose TurboTenant?

TurboTenant is great for independent landlords who need an easy-to-use and free software platform to manage their rental properties and find good applicants. Its free tenant screening feature provides you with complete credit, criminal, and eviction reports, as well as past landlord references. It also allows you to market your rental vacancies, receive online applications, accept rent payments, track expenses, and even manage maintenance requests for free.

Visit TurboTenant 

For property managers looking for free property management software, TurboTenant 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 Avail, Apartments.com, or LeaseRunner.

TurboTenant Pricing

Using TurboTenant’s 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

Visit TurboTenant

LeaseRunner: Best for Its Ala Carte Tenant Screening Reports

LeaseRunner logo

Overall Score: 3.98 / 5

What We Like

  • Customizable tenant screening report
  • Free online rental application form
  • No monthly subscription fees
  • Mobile app

  • No bundled packages
  • No live chat support
  • Total cost for complete tenant screening reports is more expensive than other services

Why should you choose LeaseRunner?

LeaseRunner is ideal for landlords managing a few properties and who want to run individual tenant screening reports. For instance, if you only need a credit score report, you don’t have to pay for criminal and eviction history records if you don’t need them. Its ala carte features also enable landlords to automate certain property management processes like rent collection and digital lease with e-signatures.

Visit LeaseRunner 

For independent landlords managing a few rental properties, LeaseRunner 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

LeaseRunner example of eviction history report.

Sample Eviction History Report (Source: LeaseRunner)

  • 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 LeaseRunner 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 Avail’s monthly free and affordable subscription plans.

LeaseRunner Pricing

LeaseRunner 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

Visit LeaseRunner

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, Buildium 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.

25%

Tenant Screening Features

20%

Pricing

20%

General Features

10%

Ease of Use

10%

Customer Reviews

10%

Expert Score

5%

Help & Support

*Percentages of overall score

How to Screen Tenants in 7 Steps (+ Free Checklist & Flowchart)

Screening tenants for a rental property is a critical process that can significantly impact a property’s success and profitability. By implementing effective screening methods, landlords can attract reliable and responsible tenants who will not only meet their rental obligations but also help property owners maximize the potential of their investment. In this article, we explore seven key steps in screening tenants to ensure landlords make informed decisions to fill their vacancies while adhering to Fair Housing Laws.

Property owners should plan ahead by utilizing a tenant screening checklist to guarantee they’ve covered the necessary steps in the tenant screening process. Download our complimentary checklist and decision flowchart below, which includes rental application items, ways to verify income and employment, and tenant interview questions.

1. Understand & Comply With Fair Housing Laws

It is important to have a comprehensive understanding of Fair Housing Laws before embarking on the apartment screening process. Familiarize yourself with federal, state, and local regulations to ensure compliance and to help you avoid any discriminatory practices. Landlords must treat all applicants fairly and equally, without any bias based on race, color, religion, sex, national origin, familial status, or disability.

To avoid breaking fair housing laws, landlords should follow these general guidelines:

  • Treat all applicants equally: Treat every applicant fairly and equally regardless of their background or characteristics. Avoid any form of discrimination or bias during the process of screening tenants.
  • Use consistent screening criteria: Develop a clear set of qualifications and requirements based on factors like income, rental history, creditworthiness, and references. Apply these criteria uniformly for all applicants and avoid making exceptions for specific individuals or groups.
  • Advertise responsibly: When advertising your rental property, avoid any language, images, or statements that could be interpreted as discriminatory. Focus on describing the property features, amenities, and location rather than using language that targets specific groups of people.
  • Ask legal and objective screening questions: During interviews or interactions with applicants, ask only legal and objective screening questions directly related to their qualifications as tenants. Avoid inquiries about protected characteristics, family status, and disabilities.
  • Maintain accurate records: Keep detailed records of all interactions, communications, applications, and screening results. Documentation can help demonstrate that your tenant selection process is fair and unbiased.
  • Use screening services: Utilize reputable tenant screening services or credit reporting agencies to conduct credit checks and background checks during the verification processes. These services are equipped to handle sensitive information and ensure compliance with fair housing laws.

2. Use a Rental Application to Prescreen Tenants

Utilizing a well-designed rental application is a practical step in the tenant screening process to protect your investment properties. A comprehensive application helps gather essential information like personal details, employment history, income verification, references, and consent for background and credit checks. The application acts as a prescreening tool, allowing you to screen tenants and determine their suitability for your rental property.

rental application should include several key pieces of information to help landlords assess the fit of potential tenants. Here are some essential details that should be listed on your application:

  • Personal and contact information: The application should require the applicant’s full name, current address, phone number, and email address. This information allows landlords to contact applicants and verify their identity.
  • Employment history: Requesting details about the applicant’s employment history, including current and previous employers, job titles, and durations of employment, helps assess their stability and income source. This information offers insights into their ability to meet their financial obligations.
  • Income verification: A rental application should include a section where applicants can provide proof of income, such as recent pay stubs, employment contracts, or tax documents. Verifying income ensures that tenants have the financial means to pay rent consistently.
  • References: Applicants should be asked to provide references from previous landlords or professional contacts who can vouch for their character and reliability. Contacting references offers valuable insights into the applicant’s rental history, payment habits, and general conduct as a tenant.
  • Rental history: It is important to gather information about the applicant’s previous rental history, including addresses of previous residences, dates of tenancy, and reasons for moving. This allows landlords to assess their rental track record and helps landlords understand where their tenant has lived and in what types of properties.
  • Consent for credit and background checks:Including a section where applicants grant consent for credit and background checks is crucial. This authorization enables landlords to request personal information on the tenant from the right legal entities.
  • Additional information: Depending on specific preferences or property requirements, the application may include additional sections, such as questions about pets and vehicle information, or ask any specific questions that might help in determining their eligibility.

3. Run a Credit Report & Background Check

Once you’ve obtained a completed rental application, you can run a credit and background check on the tenant. A credit report serves as a valuable resource for landlords by providing essential information that helps assess the financial responsibility and reliability of prospective tenants. This detailed evaluation allows landlords to gauge an applicant’s ability to meet financial obligations, including paying rent on time.

A background check is a valuable tool that landlords can utilize to gain insights into a prospective tenant’s history. By conducting a background check, landlords can uncover crucial information to help you make informed decisions during the tenant screening process.

Key information that will be found on a prospective tenant’s credit report and background check are:

  • Credit score: The credit score provides an overall snapshot of their creditworthiness. A higher score typically indicates a more responsible approach to managing financial obligations. Most landlords like to see a score of 700 or above.
  • Payment history: In the applicant’s payment history, landlords can look for patterns of late payments, delinquencies, or accounts in collections. Consistent on-time payments demonstrate a tenant’s financial responsibility.
  • Debt-to-income ratio: The debt-to-income ratio indicates their level of financial obligations compared to their income. A lower ratio suggests a better ability to manage additional rental expenses.
  • Outstanding debts: Look for any outstanding debts or judgments against the applicant, as these may affect their ability to pay rent consistently.
  • Criminal records: Check for any criminal records or convictions. While minor offenses may not be immediate grounds for rejection, serious offenses should be carefully evaluated.

4. Verify Income & Employment

Verifying income and employment helps landlords select tenants with the financial stability to fulfill their rental payments. Landlords should have a general guideline for income requirements needed from tenants. A common guideline often followed by landlords is the “three times the monthly rent” rule.

This means that applicants are typically expected to have a monthly income that is at least three times the amount of the monthly rent. For example, if the monthly rent is $1,500, applicants would generally be expected to have a minimum monthly income of $4,500.

However, you can choose to increase or decrease this multiple. For example, in New York City, tenants are required to make 40 times the rent to qualify for an apartment. So, if you want to rent a $2,000 apartment, you must make $80,000 per year.

Some landlords may have higher or lower income requirements based on their specific circumstances and preferences. Landlords can verify income and employment by contacting employers, requesting pay stubs, and employment contracts, or using professional verification services like RentPrep. Check out our RentPrep review if you’re interested in learning more about this tool.

5. Check Previous Addresses, Landlord & Eviction History

In addition to verifying income, when learning how to screen tenants for rental property, it’s essential for landlords to verify an applicant’s previous addresses and landlord and eviction history. Thoroughly vetting application information increases confidence that the applicant meets your rental qualifications and will be a good tenant.

By asking for references and rental history information on the tenant application, landlords can uncover information about a prospective tenant’s previous addresses, eviction history, and former landlord relationship status. Details you want to discuss with a tenant’s former landlord are payment history, adherence to lease terms, property maintenance, behavior as a tenant, and any issues or disputes during the tenancy.

When contacting a tenant’s former landlord, consider asking the following questions:

  • Can you confirm the applicant’s tenancy at your property?
  • How long did the applicant reside at your property?
  • Did the applicant consistently pay rent on time? Were there any instances of late payments?
  • How would you describe the applicant’s communication and cooperation during their tenancy?
  • Did the applicant maintain the property in good condition?
  • Were there any reported issues or complaints from neighbors or other tenants related to the applicant?
  • Did the applicant provide proper notice when planning to move out?
  • Were there any lease violations, disputes, or conflicts during their tenancy?
  • Would you consider renting to this applicant again in the future?

Landlords can offer tenants an easy way of paying their monthly rent online to guarantee on-time payments with Baselane. Tenants can easily submit rent payments online, eliminating the need for paper checks or in-person transactions. This streamlined approach not only saves time but also ensures timely and consistent rent collection. Additionally, Baselane provides landlords with financial management tools to allow them to track income, expenses, and quickly generate detailed financial reports.

6. Interview Applicants & Ask Screening Questions

Once you’ve reviewed all application information and you’ve determined that you would like to proceed with a prospective tenant, then conducting face-to-face or virtual interviews with applicants may help you finalize your decision.

Landlords should prepare a list of questions when screening potential renters. These questions should be tailored to your specific requirements, covering rental preferences, lifestyle, and ability to meet rental obligations. Observe their communication skills, professionalism, and general demeanor during the interview to gauge compatibility.

Here are some suggestions for what landlords can do during the interview process and sample questions they can ask to assess if the tenant will be a good fit:

Example Questions You Can AskExample Questions You CANNOT Ask
Do you have any pets?Do you have any medical conditions?
Are you willing to comply with the property’s rules and regulations?What is your sexual orientation?
Can you pay the lease application fee?Do you have any plans to start a family?
Have you ever broken a rental agreement?Are you married or single?
Are you able to meet the monthly rent obligations?Do you have a

7. Accept or Reject the Applicants After Screening

After carefully evaluating each applicant’s qualifications and determining whether they align with your renter criteria, landlords must decide whether to accept or reject their tenant’s application. Landlords should base their decision on a tenant’s creditworthiness, rental history, income stability, and overall compatibility to make an informed decision. Communicate your decision promptly and in compliance with applicable laws and regulations.

To help with the evaluation process, landlords should develop a clear set of screening criteria to objectively evaluate potential tenants. This is especially helpful when you have multiple applications, and you need to pick the applicant best fit for your property. Some screening criteria to help you with accepting the right tenant:

  • Sufficient income: The applicant should have income that meets or exceeds the requirement of three times the monthly rent.
  • Stable employment: A stable work history shows a continuous duration of time in their current job. This indicates reliability and a higher likelihood of consistent income.
  • Verifiable income: Verify the applicant’s income through their current employer documents or tax returns. This helps confirm their financial stability and ability to meet rental obligations.
  • Satisfactory credit: Assess the applicant’s credit history to make sure they have a strong credit profile. This indicates responsible financial behavior and increases the likelihood of timely rent payments.
  • Clean criminal background: Check for a criminal background free of felonies or misdemeanors to prioritize tenant safety and security.
  • Positive rental history: Evaluate the applicant’s previous residence and landlord history for a favorable track record of fulfilling lease obligations and maintaining their past properties.

After you determine whether the prospective tenant meets your criteria, you will be able to either accept or reject their application.

Tools to Assist With Screening Tenants

Landlords can leverage advanced software to screen prospective tenants. These tools offer a variety of features like automated rental applications, online background checks, and credit assessments. By using tools throughout the tenant screening process, landlords can save time, reduce manual paperwork, and make data-driven decisions. This ultimately helps with selecting the most qualified and reliable tenants for your rental properties.

Bottom Line

By taking the time to learn how to screen tenants in your property will reduce the headache of having to evict a bad tenant in the long run. Landlords should implement a thorough tenant screening process to minimize potential tenant scams, secure responsible tenants, and foster a positive landlord-tenant relationship. Leveraging technology and software tools can streamline the screening process and provide valuable insights into prospective tenants.

Real Estate Development Loans You Don’t Want To Miss

Several individuals want to get involved in real estate investing but are reluctant to take the leap. These people are ready to leave their nine-to-five job to pursue a life of financial freedom. Still, they are unaware of the sources to finance a real estate business. Many assume if they don’t have capital of their own, it is impossible to get started. However, this rationale is false.

There are a variety of ways to finance a real estate business without using your own money. Not only are there real estate development loans, but there are plenty of private lenders out there willing to take a risk on your business. If you desperately desire to leave your day job so that you can prosper as an entrepreneur, consider property development loans.

What Are Real Estate Development Loans?

Real estate development loans are capital advancements issued to borrowers who need funds to break ground on a project, build, and hold the finished product through the leasing stage. Investors typically rely on real estate development financing to do one of two things: buy raw land to eventually build on or tear down an existing building, only to build a new one.

4 Types Of Real Estate Development Loans

The most popular types of real estate development loans include, but are not limited to:

  1. Acquisition Loans
  2. Development Loans
  3. Acquisition And Development Loans
  4. Construction Loans

Acquisition Loans

As their names suggest, acquisition loans are specifically used to finance the purchase of undeveloped land. Acquisition loans will often be used to buy land with no intentions of developing on it. While common, acquisition loans provide little room for action and must typically be accompanied by subsequent loans to develop the land further. Of the real estate development loans made available to investors, this offers the least amount of freedom.

Development Loans

If borrowers want to develop the land they recently acquired, they may need a loan to move forward with any plans. Development loans are traditionally borrowed to do just that. Borrowers will take out development loans to make improvements on the land. Leveling, building roads, and running water lines may all be accomplished by taking out a development loan. On top of that, development loans are necessary to turn raw land into a building site.

Acquisition And Development Loans

Sometimes borrowers want to both acquire raw land and develop it at the same time. Fortunately, there’s a loan for that: acquisition and development loans. As their names suggest, these loans enable borrowers to buy raw land and turn it into a building site. OF the real estate development loans made available, this one is the most versatile.

Construction Loans

Construction loans — not surprisingly — are used to finance the building or renovation of a respective real estate project. According to Links Financial, “it differs from other loans in that the developer receives the money in monthly draws as development progresses rather than in one lump sum at the beginning of the project. Monthly loan payments increase as you draw out more money.”

What Is The Capital Stack?

The capital stack is the various layers of financing used to make up a project. In the real estate industry, it’s common, if not expected, to rely on more than one source of funding when acquiring a deal. Each loan makes up the resulting capital stack, with high priority funding sources on top and more senior debt on the bottom. In financing, the capital stack is made up of senior debt, mezzanine debt, preferred equity, and common equity. 

The bottom of the capital stack, or senior debt, is typically the highest priority but lowest risk debt. These are typically loans that are secured by the property. At the top, is common equity which is considered the lowest priority or highest risk debt. These loans are only repaid when the rest of the capital stack has been repaid. Essentially, this concept is used to prioritize the different financing methods that go into a real estate deal. 

11 Real Estate Funding Sources

There are several sources to finance a real estate business, but the most popular of them all are listed below:

  1. Traditional Loans: Traditional loans are those you would receive from a bank or an institutionalized lender. Their interest rates are relatively low in an attempt to remain competitive. However, their lengths are typically long, and their underwriting is extensive. Most traditional loans last anywhere from 15 years to 30 or more and come with an interest rate somewhere in the neighborhood of four percent.
  2. Private Lenders: Private lenders can be anyone with access to capital and a willingness to invest it. In other words, private lenders can be anyone from a close friend to someone you met at a networking event. As their names suggest, private lenders are not institutionalized or licensed to lend money but rather do so to make their money back with interest. Private lender terms are typically easier to meet, and the duration in which they are willing to lend will be much shorter, but at the cost of an interest rate around 12 to 15 percent.
  3. Venture Capitalists: Venture capitalists are high-net-worth individuals or corporations who tend to invest in startups that have shown potential. Venture capitalists are often willing to lend far more than a traditional small-business loan, but their selective nature can be harder to receive approval.
  4. Angel investors: Angel investors are usually well-off individuals who provide funding for new business ventures, typically in exchange for convertible debt or ownership equity. Angel investors have developed a reputation for taking more risk, but it’s important to note the money from an angel investor isn’t technically a loan. The money represents the acquisition of part of the business.
  5. Small business administration loans: Small business administration loans are issued by the government in a variety of packages. Small business loans offer many options, but they can be tedious to apply for and are not quick to receive.
  6. Real estate crowdfunding: Real estate crowdfunding is a process that involves pooling together funds from multiple sources and people. Crowdsourcing can offer recipients flexible terms and is growing in popularity.
  7. Microloans: Microloans offer small business owners to $50,000, though most people tend to take much less than that. Due to their size, small business loans are typically easier to obtain than a traditional loan, but there’s a chance the loan doesn’t cover all of your needs.
  8. Hard money lenders: Hard money lenders are not institutionalized, but they may be licensed to lend money. Their loan terms are typically short and leveraged with the asset in question. Hard money loans come with a high interest rate, often around 12 percent, but they can give borrowers access to capital fast.
  9. Home equity loans and lines of credit: Home equity loans and lines of credit, or HELOCs as they are known, represent a type of revolving credit—not unlike a credit card. Home equity loans, however, use the equity in your home as collateral.
  10. Money partners: Money partners are just that: individuals who you may partner up with because of their access to funding. If you don’t have access to capital, it may be in your best interest to partner with someone who does; they would be known as a money partner.
  11. Commercial loans: Commercial loans allow investors to purchase commercial properties. Not unlike traditional loans, commercial loans carry long durations. To minimize the risk of default, commercial loans tend to offer low interest rates. As a result, it may be harder to receive approval for a commercial loan.

Getting started in real estate investing is not as hard as you may think. If you’ve chosen your focus – i.e., single-family homes, apartments, commercial real estate, etc. – and your preferred exit strategy – i.e., flipping, buy and hold, or wholesaling – all that is left is finding the capital to fund your first deal.  The importance of understanding real estate financing should not be overlooked because financing is what can help you turn your strategies into realities. Several lending sources are made available to those who are willing to put in the work, which is why “I don’t know how to finance a real estate business” is no longer an excuse to avoid investing.

Alternatives For Small Business

Small businesses looking for financing methods have more than a few options to choose from. If you own a growing company and need to keep reinvesting returns, check out the following alternatives: 

  • Private Placement: A private placement is essentially a real estate syndication, but the business would take the role of project sponsor. In this arrangement, an unregistered securities offering is made directly to investors. The goal is to bring more equity to the current project.
  • Build-to-Suit: Build-to-suit is exactly what it sounds like. A commercial project is designed and built for the end user, it is then managed by an investor who manages the financing. In return, the operating business agrees to sign a long-term lease. While the business does not officially own the property in a build-to-suit arrangement, they do get long-term access to a custom build space.
  • Sale-Leaseback: A third option to consider is a sale-leaseback. In this arrangement, a property is sold to an investor and the business leases it back. Similar to a build-to-suit arrangement, the business will not own the property in the end. However, the money earned from the sale can then be funneled into a new development project.

6 Tips For Getting Property Development Loans

Acquiring money for property development may prove difficult for first-timers. Because the crash rate for property development is high, only experienced developers obtain loans easily. Follow these suggestions to help you overcome to difficulties of gaining real estate development loans:

  1. Acquire Credibility: You should try to gain the experience needed to be trusted with a real estate development loan. This can be done by working for an established property developer, and in turn, they can give you this credibility.
  2. Find A Partner: Partners can be useful if you already have some of the funds to begin with. If you find a developer to partner with, they will be able to co-finance with you.
  3. Develop An Attractive Plan: Acquiring property development financing can be gained easier by creating an attractive project plan. Developers who are just starting usually look into small residential projects consisting of one or two homes. Property development loans can take up to months to obtain. In some cases, the property you want may be off the market by the time you receive a loan. Try to identify several different properties you may be interested in. Zoning limitations, access easements, utility easements, and other special conditions are all things you should research when developing a plan.
  4. Do Your Research: Potential lenders will be more likely to offer you a real estate development loan when you provide an extensive amount of information about your project. Research the local property market to establish accurate sales prices and prepare any building cost estimates, including materials, labor, overhead, and profit.
  5. Practice Your Pitch: Finally after all your planning is complete, begin rehearsing your pitch. Take all the information you’ve gathered and express it confidently, concisely, and convincingly. Be prepared to answer any questions about costs and the property itself. The more information you can provide them on the spot, the more your lenders will be willing to give you a property development loan.
  6. Keep Costs Low: When it comes to property development loans, you want to keep all costs for the project low. The lower your costs, the higher your profits. If you can keep your development costs low, you benefit both yourself and any potential equity investors. You will also want to keep costs low if you are getting a property development loan from a bank. It is proven easier to secure funding for lower costs projects. When banks provide debt, they reference two numbers: the percentage of your total projected cost and the percentage of total projected value once the project is completed. As the repayment of this debt is very difficult during the development process, you will want to keep initial costs low. If anything goes wrong, banks will be unforgiving.

Best Real Estate Development Loans

When looking for the right real estate funding sources, it is important to weigh the costs, qualification requirements, speed of approval, and more. Aspiring investors should be careful to examine any variables involved in receiving real estate development loans to ensure they choose the best financing option for the situation at hand. The following list of real estate development loans is a great place to start:

  • US Bank: Loans provided through US Bank are a great option as they can allow investors to borrow up to 80 percent of the property value. Their loans can come with variable or fixed interest rates, and repayment terms can be up to 25 years.
  • Wells Fargo: Wells Fargo is one of the biggest real estate funding sources in the country. Investors may find they can be granted funds as quickly as four to six weeks when working with Wells Fargo. Additionally, they are less focused on borrowers’ credit when compared to other financing sources.
  • JP Morgan Chase: JP Morgan Chase provides real estate loans to several real estate investors each year, focusing on property types ranging from multi-family to mixed-use. One of the biggest benefits of working with this loan provider is the streamlined application and qualification process.
  • Liberty SBF: This lender is a great option for investors looking to borrow up to 90 percent of the property value. Their flexible loans will typically be made up of three portions, coming from a mix of traditional lenders, development companies, and your own down payment.
  • SmartBiz: SmartBiz works to match investors and loan providers based on the borrowers specific needs. Their loans are most attractive for investors seeking financing quickly, though the qualifications can be higher when compared to other loan providers.

4 Stages Of Real Estate Development

There are 4 stages of real estate development when looking at a standard development process. The first stage is choosing the right site and purchasing the land that you will be using for your development. The next step is to start planning your development as well as securing the permits and licenses required to build on the land. The third step is to start the development and construction of the project. The final step is to finish construction and start operating the development as you had planned. 

Funding For Real Estate Investing: Which Will You Choose?

To find financing for real estate development, you must start by reviewing your strengths.  The above options are almost always available, but you must understand what you’re getting yourself into before pursuing a particular strategy.

Regardless of what financing option or development loan you go after, all lenders will want to hear certain things. Be straightforward as you lay down the numbers and tell them what they can expect. Lenders will want to know your timeline, your expected profit, the loan amount required, when they can expect to see a return, and how involved you want them to be.

While it is important to appear confident in any meeting with a potential lender, it is most important to be transparent and gracious. Remember, the lender is helping you. Of course, they will benefit so long as the deal pans out the way you hope it to, but they are still taking a risk. Be ready to share your portfolio and answer any question a lender throws your way.

Summary

Financing a real estate deal is a very involved process. In fact, there are several real estate development loans designed to help buyers in every situation. If, for nothing else, everyone’s needs are different, and the loan options made available to borrowers suggest as much. As a result, borrowers need to shop around and confirm they are borrowing the right loan.

Lots More Price Declines Are Coming’: Moody’s Chief Economist Sounds Alarm On Commercial Real Estate, Warns That Loan Defaults Are ‘Sure To Increase’

Real estate investing has gained popularity in recent years — perhaps because the asset is a well-known hedge against inflation. But according to Moody’s Analytics, it’s not all sunshine and rainbows.

Data from Moody’s Analytics reported by Bloomberg revealed that commercial real estate prices in the U.S. fell in the first quarter of 2023, marking the first decline since 2011.

Courthouse records of transactions analyzed by Moody’s showed a drop of less than 1% in the commercial real estate market during the quarter. Multifamily residences and office buildings were the key sectors driving this decline, according to the report.

And this could be just the beginning. Moody’s Analytics Chief Economist Mark Zandi warned that “lots more price declines are coming.”

Don’t miss:

Delinquencies And Defaults

Zandi explained the reasoning behind his bearish outlook on Twitter.

The economist pointed out that demand for commercial real estate is weak because of more people working remotely and shopping online. A substantial number of multifamily units are under construction. Meanwhile, it’s challenging to obtain credit for refinancing and purchasing properties.

As a result, Zandi said commercial real estate prices are “expected to be off 10% peak-to-trough by mid-decade.”

And borrowers will likely face difficulties in meeting payment obligations.

“CRE loan delinquencies and defaults are sure to increase, causing agita for the banking system,” Zandi said in a tweet.

Zandi also mentioned that rising delinquencies and defaults “shouldn’t be the catalyst for a revival of the banking crisis” because property owners have built up “ample equity” as a result of the substantial price gains during the pandemic.

Office Vs. Housing

Zandi isn’t the only expert to sound the alarm.

During an interview with former Fox News personality Tucker Carlson, Tesla Inc. CEO Elon Musk issued a bleak warning regarding commercial real estate.

“We really haven’t seen the commercial real estate shoe drop. That’s more like an anvil, not a shoe,” Musk said. “So the stuff we’ve seen thus far actually hasn’t even — it’s only slightly real estate portfolio degradation. But that will become a very serious thing later this year, in my view.”

He argued that the work-from-home trend has substantially reduced the use of office buildings around the world. And that does not bode well for the segment.

“Almost all cities at this point have record vacancies of commercial real estate,” Musk said.

Billionaire investor Stanley Druckenmiller also highlighted the challenges facing office buildings at the 2023 Sohn Investment Conference.

When discussing how the median regional bank has 43% of its loans in commercial real estate, Druckenmiller pointed out that “around 40% of that is in office.”

And because of the Great Resignation and more people working from home, he said, “We have a higher vacancy rate than we had in 2008.”

But it’s a different story for housing.

“Housing has obviously gone down dramatically given the 500 basis-point increase in interest rates,” Druckenmiller said.

“But unlike [2007 and 2008], we actually have a structural shortage in single-family homes going into this. So if things got bad enough, I could actually see housing — which is about the last thing you would think of intuitively — could be a big beneficiary on the way out.”

The reality is, elevated home prices and high mortgage rates mean owning a home is less feasible. And when people can’t afford to buy a home, renting becomes the only option. This creates a stable rental income stream for landlords.

The best part? It’s easy for retail investors to invest in housing — and you don’t actually need to buy a house to do it. There are publicly traded real estate investment trusts that own income-producing properties and pay dividends to shareholders. And if you don’t like the stock market’s volatility, there are crowdfunding platforms that allow retail investors to invest directly in residential real estate with as little as $100 through the private market.

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This article ‘Lots More Price Declines Are Coming’: Moody’s Chief Economist Sounds Alarm On Commercial Real Estate, Warns That Loan Defaults Are ‘Sure To Increase’ originally appeared on Benzinga.com

HUD Grants Nearly $9-Million to Jericho Project to House Unsheltered New Yorkers

Jericho Project was awarded $8,906,646 by the U.S. Department of Housing and Urban Development (HUD) as part of a nationwide effort to address street homelessness among unsheltered people in cities and rural communities. Jericho is a nationally-acclaimed nonprofit that for 40 years has combatted the root causes of homelessness and improved the lives of thousands of New Yorkers annually with supportive housing and the vital services to sustain it.

Jericho will serve 90 unsheltered homeless participants per year over a three-year grant period. This is part of the total $60-million that HUD distributed in funding to the New York City Continuum of Care (CoC) for the Unsheltered Homeless Initiative. Overseen by the Department of Homeless Services, the funds were applied for by the Department of Social Services. 

“As a longstanding advocate for permanent supportive housing, Jericho is thrilled to be able to move unsheltered New Yorkers into stable housing and provide ongoing counseling to support them. We applaud HUD and our local Continuum of Care for their leadership in helping some of our most vulnerable neighbors in their time of need,” said Tori Lyon, CEO of Jericho Project.

Jericho will execute the program using its Rapid Rehousing Program, which helps speed individuals and families into affordable apartments through Jericho’s network of landlords who are sympathetic with the plight of homelessness. In addition to helping secure the housing, Jericho provides tenants with ongoing counseling in managing finances and maintaining housing stability to ensure a good experience for both the tenants and the landlords.

The program will provide Temporary Financial assistance (TFA) and HUD is providing long-term vouchers for each participant at the conclusion of the TFA period to ensure long-term housing stability. 

To facilitate this program, Jericho will hire 15 staff members to provide intensive case management services, clinical therapy, housing, and other supportive services. The project is slated to begin July 15th.

Jericho has a positive track record in Rapid Rehousing. In 2022, it served 450 veteran families, moving 170 into permanent housing, and moved 91 other households into permanent housing, on average in less than 30 days.

Overall, Jericho currently provides more than 600 units of housing in the Bronx and Harlem in eight residential buildings which are upgraded for sustainability. With 24/7 staff and onsite counselors, the residences are designed to cultivate a community of camaraderie and wellness. 

Jericho also enables families to achieve stable, safe housing in apartments throughout the city, including 80 studio and one-bedroom units for adults and 35 one-, two-, and three-bedroom apartments for families. 

About Jericho Project: Jericho Project empowers individuals and families experiencing homelessness or housing insecurity by providing housing and person-centered services to address social inequities. For 40 years, Jericho has provided supportive housing and counseling services to thousands of individuals experiencing chronic homelessness, mental illness and substance abuse. 

Jericho Project employs rigorous fiscal discipline and works with valued public-private partnerships and a foundation of dedicated donors, to advance its mission. Jericho’s housing and extended services cost $18,000 per person annually, compared to $50,000 for a single adult shelter, $74,000 for a room in a family shelter, $115,000 for a city jail cell and $1000+ per day for a hospital bed.

http://www.prweb.com/releases/hud_grants_nearly_9_million_to_jericho_project_to_house_unsheltered_new_yorkers/prweb19355708.htm

How to Build Passive Income Streams as a Real Estate Investor

Real estate investing has become increasingly popular in recent years. One of the reasons for this is the ability to generate passive income. Passive income streams are a great way to create long-term wealth with minimum effort and involvement.

As someone who has invested in real estate for passive income, I can attest to the benefits of this investment strategy. I remember purchasing my first rental property and feeling both excited and nervous about the prospect of being a landlord. However, as time went on, I found that the passive income generated from my rental property allowed me to achieve financial stability and freedom. I was able to use the rental income to pay off the mortgage on the property and generate a steady stream of passive income each month. It was a great feeling to see my investment grow over time and know that I was securing my financial future.

In this article, we’ll explore how you can build passive income streams as a real estate investor.

Understanding Passive Income

Before we dive into the different ways you can generate passive income as a real estate investor, it’s important to understand what passive income is. Passive income is money that you earn without actively working for it. In other words, it’s income that you earn passively with minimal effort and involvement.

Strategies To Generate Passive Income

  1. Rental Properties

Rental properties can provide a steady stream of passive income through rent payments from tenants. To generate passive income from rental properties, investors should aim to purchase properties with positive cash flow, meaning the rent income exceeds the expenses associated with the property. Additionally, investors can hire a property manager to handle day-to-day operations, freeing up their time and allowing for truly passive income.

  1. Real Estate Investment Trusts (REITs)

REITs are a passive investment option that allows investors to purchase shares in a company that owns and manages a portfolio of income-producing real estate properties. The income generated from these properties is then distributed to shareholders in the form of dividends. To earn passive income through REITs, investors can purchase shares through a broker or online investment platform.

  1. Crowdfunding

Crowdfunding platforms allow investors to pool their money with others to invest in real estate projects, typically with lower investment minimums than traditional real estate investments. Investors can earn passive income through crowdfunding by receiving a portion of the income generated by the property, such as rental income or profits from a property sale.

  1. House Hacking

House hacking involves living in a property and renting out a portion of it to generate passive income. This strategy can be particularly effective for those looking to purchase their own home, as the rental income can offset the cost of the mortgage. To earn passive income through house hacking, investors should ensure the rental income exceeds the expenses associated with the property.

  1. Short-Term Rentals

Short-term rentals such as Airbnb can be a lucrative way to generate passive income, particularly for those with properties in desirable locations. To earn passive income through short-term rentals, investors should ensure their rental rates are competitive, provide excellent customer service, and maintain a well-appointed and well-maintained property.

  1. Flipping Houses

Flipping houses involves buying a property, fixing it up, and selling it for a profit. While flipping houses requires more work than some other strategies, it can still generate passive income if investors hire a team to handle the renovations and sale. To earn passive income through flipping houses, investors should aim to purchase properties with high potential resale value and minimize their time spent on the renovation and sale process.

  1. Commercial Real Estate

Commercial real estate investments can provide passive income through leasing the property to tenants. To earn passive income through commercial real estate, investors should aim to purchase properties with desirable locations and solid tenant bases and hire a property management company to handle day-to-day operations.

  1. Private Lending

Private lending involves lending money to other real estate investors for their projects. To earn passive income through private lending, investors should ensure the borrower has a solid track record, and the loan is secured by the property, and agree on a competitive interest rate and repayment terms.

  1. Real Estate Notes

Real estate notes involve purchasing the debt on a property and earning passive income through interest payments. To earn passive income through real estate notes, investors should ensure the borrower has a solid track record, the property has a desirable location, and agree on a competitive interest rate and repayment terms.

How to Choose the Right Passive Income Stream

Now that you have an understanding of the different ways you can generate passive income as a real estate investor, it’s important to choose the right passive income stream for you. Here are a few factors to consider:

  1. Time Commitment

When choosing a passive income stream in real estate, it’s essential to consider the amount of time you’re willing to commit to it. Rental properties and flipping houses require a significant amount of time commitment, as they involve managing tenants, maintenance, and renovations. On the other hand, REITs and real estate notes require very little time commitment, as they involve investing in a company or debt instrument. Consider your lifestyle and how much time you have available to devote to your passive income stream.

  1. Upfront Investment 

Another factor to consider when choosing a passive income stream in real estate is the upfront investment required. Rental properties and flipping houses require a significant upfront investment in the form of a down payment and renovations. On the other hand, REITs and crowdfunding require a much smaller upfront investment. Consider your financial situation and how much money you’re willing to invest upfront.

  1. Risk Tolerance 

It’s important to consider your risk tolerance when choosing a passive income stream in real estate. Rental properties and flipping houses come with a higher level of risk as they are directly tied to the real estate market and require a significant amount of investment. REITs and real estate notes, on the other hand, come with a lower level of risk as they offer a more diversified portfolio. Consider your risk tolerance and willingness to take on more significant risks for potentially higher returns.

  1. Personal Goals

Finally, consider your personal goals when choosing a passive income stream in real estate. Do you want to generate a lot of passive income quickly, or are you willing to take a slower approach? Do you want to be hands-on with your passive income stream, or would you prefer a more hands-off approach? Consider your goals and how your chosen passive income stream can help you achieve them. For example, if you’re looking to generate a lot of passive income (relatively) quickly, flipping houses may be a better option than REITs, which offer more stable returns over time.

Summary

Building passive income streams as a real estate investor can be a great way to create long-term wealth. Whether you choose to invest in rental properties, REITs, crowdfunding, house hacking, short-term rentals, flipping houses, commercial real estate, private lending, or real estate notes, there are many ways to generate passive income as a real estate investor. Consider your personal goals, risk tolerance, and time commitment when choosing a passive income stream, and remember to educate yourself, diversify your portfolio, build a strong team, and be patient.

As I experienced, and while risky, building up passive income streams can be exceptionally rewarding in the long run allowing you to enhance your lifestyle and provide you with financial freedom and flexibility. 

If you find yourself ready to invest in your passive income dreams, you’ll likely need some funding to turn those dreams into a reality. Well, the good news is you are already in the right place! Our team at REI News specializes in finding the most trusted and affordable lenders for real estate investors. Discover your financing optionsby speaking to us today!

Homes for Less Than $200K?! Yes, They Do Exist—and Here Are the Cities Where You Can Find the Most

With high inflation, high home prices, high mortgage interest rates, and high just about everything, affordability remains Concern No. 1 for home shoppers on a budget. Nothing else even comes close—especially for first-time homebuyers or those without trust funds or wealthy benefactors.

More and more Americans have begun to see the dream of homeownership as a fast-fading mirage.

That’s where the Realtor.com® data team can help! It turns out there are still plenty of affordable homes on the market—if you know where to look. In several parts of the country, there are hundreds, even thousands, of homes for sale for less than $200,000.

Yes, you read that correctly.

A price point of $200,000, with a 10% down payment, would generally keep the monthly payment below $1,200, before mortgage insurance, HOA fees, or property taxes. (This calculation considers current mortgage rates hovering around 6% for 30-year fixed-rate loans.)

So, where are these ultra-affordable homes? For starters, look to the middle of the country. It’s traditionally affordable cities such as Indianapolis, St. Louis, and Detroit that dominate the list. Only one of the metros on the list, Baltimore, is on a coast.

Some of these markets have been very affordable because they’ve been challenged with stagnant—or negative—population growth, and without vibrant job markets. Others are markets that are on the ascent, but are still relatively affordable. And a few are in between.

Take Detroit. The city hollowed out after manufacturing jobs dwindled. That drove down real estate prices, which then attracted a new set of incoming residents who want to take advantage of how affordable it is.

Charles Ryan, an associate broker and Realtor® at Keller Williams in Detroit, says he’s seen a lot of newcomers in the past decade.

“People who were never even from the city have turned their eyes to Detroit,” he says.”They want to open a new business, purchase homes, rehab homes. In the last eight or nine years, the city has just been thriving.”

In Cleveland, people are moving back after leaving years ago, says Lindsay Kronk, a real estate agent at Howard Hanna there.

“It’s the boomerang effect, where they grew up, then left, and now they’re coming back,” she says. “People are coming for jobs, generally. There’s strong job growth here now.”

To find where homes priced below $200,000 are still available, Realtor.com scrutinized listing data for the 100 largest metros. We looked at the metros with the most home listings priced at $200,000 or less as well as the percentage of such homes. Then those two metrics were averaged together to come up with our rankings. We limited the rankings to one metro per state for geographic diversity. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)

Looking for a true real estate bargain? Keep reading.

1. Detroit, MI

Number of listings priced below $200,000: 3,926
Percentage of listings priced below $200,000: 39%

The Motor City has the most homes for sale priced below $200,000, with almost 4,000. And almost half of those are priced below $100,000.

Detroit also has the smallest homes of any city on the list, with the metro’s overall median home size just below 1,500 square feet.

But buying in Detroit at a lower price point can be tricky, according to Tom Nanes, a Realtor with Community Choice Realty Associates, in Detroit.

The prices are kept low, he says, because the city’s center is a patchwork of housing in a wide variety of stages of livability.

In some cases, “it’s cost-prohibitive to update some of these homes. There are still houses with knob and tube wiring. You can’t update that. You have to do a full replacement on the electric at that point,” he says. “So, you could spend $50,000 without getting halfway through what the home needs.”

Even if buyers find a suitable home at a price they want, it might be surrounded by homes that will eventually be razed, he explains. “Until those abandoned homes have been cleaned up or leveled, the prices aren’t going to be climbing like the suburbs.”

So the opportunities are there for people who can work with Detroit’s aging home stock, whether it’s first-time homebuyers who don’t mind putting in some work on a fixer-upper or investors looking to upgrade a home to sell or rent out.

For $83,000, someone can pick up this 95-year-old, 1,500-square-foot, four-bedroom, brick home in the Yorkshire Woods neighborhood of Detroit.

2. Pittsburgh, PA

Number of listings priced below $200,000: 2,026
Percentage of listings priced below $200,000: 32%

Almost 1 in every 3 homes for sale in the Steel City is less than $200,000. Pittsburgh has undergone a significant renewal in recent years, and those efforts combined with lower prices have made the area attractive to both buyers and investors.

During the COVID-19 pandemic, home flippers bought up properties in neighborhoods such as LawrencevilleEast Liberty, and Garfield, leading to rising prices in these communities.

Like Detroit, Pittsburgh has relatively small homes, at just above 1,500 square feet for the median listing. And Pittsburgh has the most median days spent on the market of any metro on the list, at about 2.5 months.

Right now, $200,000 will get a two-bedroom home with an unfinished basement about 10 minutes north of downtown Pittsburgh. Or buyers can find a three-bedroom Cape Codder with an updated kitchen, hardwood floors, and a fenced yard in the Brookline neighborhood to the south of downtown.

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Watch: How Much Do You Need To Save To Buy a $300,000 Home?

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3. Cleveland, OH

Number of listings priced below $200,000: 1,598
Percentage of listings priced below $200,000: 31%

Cleveland not only comes in at No. 3 on our list, it also has the lowest overall median listing price right now, at $189,000. (It also has some of the cheapest mansions in the nation for those seeking lots of space.)

No matter where you look in the Cleveland area, there are options for buyers in this price range, says David Sharkey, the president and broker of Progressive Urban Real Estate.

“You get out to the outskirts, and you can find some really affordable stuff,” Sharkey says of larger single-family homes on the city’s periphery. “Then you come into the city, into the inner suburbs, and you can still find homes under $200,000. Those might need renovations or updating, but people are doing it.”

Sharkey says he sees lots of reinvestment in Cleveland’s homes by homeowners who buy at a low price and then renovate to their taste. One of his listings in Brooklyn, OH, an inner suburb about 10 minutes south of downtown Cleveland, has been completely rehabbed with quartz countertops, refinished cabinets, and a waterproof basement.

This gutted three-bedroom home in the Ohio City neighborhood is listed for $190,000 and advertised as an opportunity to renovate the home for a significant profit. (Similar properties that have been renovated are selling for $400,000 or more.) For a more turnkey home, this four-bedroom house with hardwood floors in the Brookside neighborhood is listed for $160,000.

4. St. Louis, MO

Number of listings priced below $200,000: 1,622
Percentage of listings priced below $200,000: 22%

St. Louis, the Gateway to the West, has more than 1,600 homes for sale priced below $200,000.

The area has been known for affordable real estate for a long time, but also for its crime and racial tensions. Ferguson, a city on the northwestern edge of the St. Louis area, became one of the catalysts of the Black Lives Matter movement, after the 2014 shooting of Michael Brown.

The area’s troubles are part of the reason why real estate remains more affordable here than in other Midwestern cities.

For less than $100,000, home shoppers can get a three-bedroom townhome in the North Riverfront neighborhood, about 15 minutes north of downtown and within walking distance of the Mississippi River.

5. Baltimore, MD

Number of listings priced below $200,000: 1,202
Percentage of listings priced below $200,000: 17%

Baltimore has more than 1,200 homes priced below $200,000, but it also has the highest median listing price among the cities we ranked, at $319,000 in January.

The story of Baltimore’s housing is best summarized as “always on the verge of a comeback,” says Richard Clinch, director of Jacob France Institute at the University of Baltimore.

Baltimore has pricier neighborhoods with wealthier residents just blocks away from more economically depressed communities.

Clinch is optimistic about the city’s future with new jobs and industries moving in. And the Maglev, a proposed high-speed train to connect Baltimore to Washington, DC, should make the area more desirable.

For just under $200,000, home shoppers can get a renovated, 1,500-square-foot, three-bedroom townhome in the Highlandtown neighborhood, 15 mins east of downtown and Baltimore’s Inner Harbor. It features hardwood floors and stainless-steel appliances.

6. Birmingham, AL

Number of listings priced below $200,000: 873
Percentage of listings priced below $200,000: 20%

Alabama’s capital city, which became known as the “Pittsburgh of the South” due to its industrial industries in the early part of the 20th century, has nearly 900 homes listed for less than $200,000.

Demand for homes faltered in the 1960s as many white residents left the city during the civil rights movement. That left more homes than there were buyers for. And while the city has rebounded in recent years, buyers can still find deals.

The metro has the second-longest time on the market of any city on the list, with the median listing notching more than two months. A home shopper in Birmingham can score a three-bedroom homewith new flooring and paint in the College Hills neighborhood, 2 miles west of downtown, for $185,000.

7. Chicago, IL

Number of listings priced below $200,000: 3,662
Percentage of listings priced below $200,000: 15%

Chicago is the biggest metro on the list, and it’s the second most expensive, with a median listing price of $315,000. Due to its sheer size, it also has the second most homes under $200,000, at more than 3,600.

Those cheap homes might be a boon to cash-strapped buyers in the city who have been facing some of the highest spikes in rental prices in the nation. Rents shot up 17.5% year over year in December, according to the most recent Realtor.com data. With median rent at just under $2,000 a month, financially savvy residents might want to see if it would be cheaper to become homeowners if they can afford a down payment and closing costs.

This three-bedroom, brick walkup with hardwood flooring, a full basement, a detached garage, and a yard in the Pullman neighborhood on the South Side is going for $180,000.

8. Memphis, TN

Number of listings priced below $200,000: 711
Percentage of listings priced below $200,000: 17%

Memphis buyers will save the most money becoming homeowners rather than remaining renters. They will also find the largest homes of any of the metros on this list. Plus, they can get a deal: About 1 in 6 sellers in the metro reduced their list price since they put their properties on the market.

Diane Malkin, an affiliate broker at Marx Bensdorf Realtors in Memphis, says the past few years have been hot for investors. The population has grown and home prices have risen fast, enticing those with the means to fix up the older homes in Memphis.

As the market has cooled, shoppers have become pickier about finding the right opportunities in the city. But they’re still buying.

“A lot of what I’m seeing, working with investors, they’re looking for some of those targeted ZIP codes that are still on the up and up,” she says. “It’s a lot of rehab.”

For $185,000, buyers can get get a studio condo in downtown Memphis, within walking distance of the Mississippi River. It comes with granite counters, a walk-in shower, and a rooftop grill with views of the river and city. Or they can get a fully renovated three-bedroom home in the Uptown neighborhood, 5 minutes north of downtown

9. Indianapolis, IN

Number of listings priced below $200,000: 879
Percentage of listings priced below $200,000: 15%

Indianapolis, known as the “Crossroads of America” and home to the Indy 500, is one of the most affordable metros in the nation. It has almost 900 homes listed for under $200,000.

Like Memphis, Indianapolis offers some of the larger homes of the metros on the list and about 1 in 6 sellers has also reduced prices.

This 2,100-square-foot, three-bedroom condo is available for $170,000 in the Farhill Woods neighborhood in the southern suburbs.

10. Rochester, NY

Number of listings priced below $200,000: 923
Percentage of listings priced below $200,000: 42%

Rochester, which sits on the shores of Lake Ontario, has had one of the hottest real estate markets in the nation for months. That’s due to its ultra-affordability: Almost half of Rochester’s homes are listed below $200,000.

Rochester also stands out for having the lowest percentage of homes with price reductions. So there doesn’t appear to be much room for negotiations on the price. It also has the quickest average time on the market before selling, at about seven weeks.

For $199,000, homebuyers can get a newly renovated three-bedroom, Colonial-style home in a cul-de-sac in the southwestern suburbs. Or for just $149,000, they can find a three-bedroom home, built in 1992, advertised as having a chicken raising variance—a nice way to blunt the fast-rising egg prices in the U.S.