Written by Emily Koelsch
Bad rental outcomes are something new and seasoned investors dread. When it comes to bad outcomes, evictions are a worst-case scenario for most Landlords. Evictions are expensive, time-consuming, and stressful.
For most owners and property managers, they’re a last resort after missed rent payments, ongoing Lease violations, or illegal or dangerous activity on the property.
The bad news is that evictions are more expensive than most Landlords realize. But, the good news is that the right systems can dramatically reduce the risk of evictions and other bad rental outcomes.
To help you avoid this Landlord nightmare, here’s an in-depth look at how costly evictions are and some tangible ways to reduce the risk of having to evict a Tenant.
Required Steps in the Eviction Process
To appreciate how costly evictions are, it’s helpful to understand the required steps in the eviction process. While specific requirements vary from state to state, the general process for filing an eviction includes:
- Providing your Tenant with the required notice. Most evictions are the result of either nonpayment of rent or a Lease violation. Before filing an eviction, Landlords must issue a Notice to Quit that states the reason the notice is being sent and gives the Tenant a specific amount of time to either pay rent, cure the Lease violation, or vacate the property. The notice period varies from state to state but is usually between 3 days and 14 days.
- If the Tenant fails to pay rent, cure the Lease violation, or vacate the property after the required notice period, the next step is filing an Eviction Complaint with the local court. In addition to filing the Complaint, you must service the Tenant with the Complaint and a Summons.
- The Tenant can either answer the Complaint or wait to respond at the hearing.
- After a scheduled hearing, the judge will rule in favor of either the Landlord or Tenant. If the judge rules in favor of the Landlord, you’ll receive a Court Order or Warrant of Eviction stating that the Tenant has to vacate the property by a specific date.
- If the Tenant does not comply with this Court Order, you can ask a local law enforcement officer to remove the Tenant and their possessions from your property.
- Once the Tenant is removed from the property, the Landlord must change the locks, remove all personal property of the tenant, make necessary repairs, and deep-clean the property. After the property is cleaned and back in good condition, the Landlord can list it and begin searching for a new Tenant.
A Breakdown of Eviction Costs for Landlords
The entire eviction process usually takes around 2-3 months and costs landlords an average of around $3,500. That said, the cost of evictions can range from around $2,000 to $10,000.
Here’s a breakdown of expenses Landlords face during a standard eviction:
Legal Fees
We always recommend that Landlords hire an experienced local attorney to handle their eviction. While this can be expensive, it’s worth the cost to ensure that your eviction is handled correctly, that you’re successful, and that you comply with all laws.
The legal fees for an uncontested eviction generally start around $500. However, if your case is contested, these fees can easily be around $1,000-$2,000.
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Court and Filing Costs
Every state has fees for filing an Eviction Complaint. These range from $15 to $150. In addition, there are court fees, which are usually around $50. Landlords also must pay a service fee to have the Summons served on the Tenant, which ranges from $30 to $150.
If law enforcement is required to remove the Tenant after a Warrant of Eviction is issued, this is an additional fee that usually ranges from $50 to $500.
Unpaid Rent
Past due rent is the most common cause of eviction proceedings. Whatever the reason for your eviction, likely, you won’t receive any rent payments during the eviction process. Eviction proceedings generally take around 2 to 3 months.
To allow time for all steps of the eviction process plus time to prepare the property for a new Tenant, Landlord should anticipate a minimum of three months with no rent payments. Using the average rental price in the United States of $1,554, that would be a loss of around $4,662 for the average Landlord.
Property Repairs and Turnover Costs
Once the Tenant is removed from the property, the Landlord has to:
- Change the locks ($150)
- Make necessary repairs, which can range from a couple of hundred dollars to thousands of dollars depending on the condition of the property
- Deep clean the property ($200 – $500)
In some states, Landlords are also required to store any personal possessions left behind after an eviction. This means additional work and fees for Landlords.
It’s worth noting that, in addition to the many tangible expenses of evictions, they are time-consuming and stressful for Landlords to deal with. Evictions mean lots of additional work, hours, and nuisances for Landlords.
Be Proactive About Reducing the Risk of Evictions
Given how difficult and expensive evictions are, real estate investors should be proactive about preventing evictions. Fortunately, the right property management systems can drastically reduce the risk of bad rental outcomes.
Here are three steps to help you avoid evictions:
- Always screen tenants. Effective tenant screening ensures that you only rent to qualified applicants who will pay rent on time and take care of your property. Screening all applicants and only renting to qualified applicants is the best way to prevent evictions.
- Use a detailed Lease Agreement that provides clear guidance on rental policies, property rules, and late fees. At move-in, go over the Lease with your new Tenants and ensure they understand all Lease terms.
- Be consistent about enforcing the Lease and proactive if a Tenant violates the Lease. If you’re consistent about enforcing Lease terms, including late fees, you reduce the risk of Tenants falling behind on rent. If Tenants do fall behind on rent, be proactive about addressing it. If your Tenant is communicating with you, try to work with them to come up with a plan to get them back on track. If your Tenant is not willing to work with you, consider a Cash for Keys Agreement or move forward with a Notice to Quit for Nonpayment. The longer you wait, the more costly and difficult the process becomes.
Reduce Your Risk of Evictions With Good Screening & Property Management
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Create an account today and let us help you prevent evictions and other bad rental outcomes.
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By Noel Krasomil
Learning how to calculate a rental property’s cap rate helps you evaluate its potential income, weigh it against other investment opportunities, and make more pragmatic decisions.
Failure to consider a property’s cap rate can come at a steep cost, as you could end up overpaying, underestimating risk, or falling short of anticipated returns.
Keep reading to arm yourself with valuable information that will help you avoid the dreaded scenarios above. To assist, we’ll discuss how to calculate capitalization rate, crucial factors to consider, common mistakes to avoid, and more.
What is the capitalization rate?
Capitalization rate (also known as cap rate) is a real estate calculation used to determine an investment property’s rate of return based on its current market value and net operating income.
By calculating a property’s cap rate, you’ll produce a statistic that indicates how much income a property will produce relative to its market value. This key metric will enable you to make decisions based on actual, proven numbers (not gut feelings or instinct).
Significantly, financing (mortgage amount, interest rates, equity, etc.) does not factor into calculating a property’s cap rate.
The quick formula for calculating cap rate is:
Cap Rate = Net Operating Income (NOI) ÷ Property Value
While the equation above may seem simple, making an accurate calculation means first correctly calculating your property’s NOI and value.
Taking the time to do so is paramount for analyzing a property’s income-earning potential, which can guide future real estate investment decisions. We’ll discuss this topic further in the following sections.
Why Calculating an Accurate Cap Rate is Important
Calculating an accurate cap rate will help you make a well-informed decision based on actual, proven numbers.
Making an inaccurate property calculation could lead to:
- Overpaying for a property: An overblown cap rate could make an investment look stronger than it actually is, leading to a purchase significantly above market value.
- Misinterpreting investment risk: A poorly calculated cap rate could mask signs of instability, such as unreliable rental income and high operating costs.
- Overlooking better investment opportunities: Becoming enamored with an inaccurate cap rate could lead you to look past better rental properties.
- Inaccurate projections: If you miscalculate a property’s cap rate, you risk throwing off projections, which could negatively affect your portfolio.
Exercise due diligence as you calculate a property’s cap rate. Accurate, provable numbers are key and will help you to act confidently and make savvy investment decisions that grow your portfolio.
We’ll start by calculating NOI.
How to Determine Net Operating Income (NOI)
Net operating income is determined by taking a property’s gross operating income and subtracting its operating expenses:
Net Operating Income = Gross Operating Income – Operating Expenses
Gross operating income is calculated by taking a property’s potential rental income, adding its other income, and subtracting its vacancy loss:
Gross Operating Income = Potential Rental Income + Other Income – Vacancy Loss
Potential rental income measures the total base rent amount you would collect if the investment property stays occupied year-round at current market rates.
Other income is revenue that a property generates outside of base rent. A few examples are:
- Parking fees
- Pet rent
- Storage fees
- Application fees
Vacancy loss measures the estimated income lost due to vacancies or unpaid rent, typically represented as a percentage.
Operating expenses measure all recurring costs required to keep an investment property running. A few examples are:
- Property management software costs
- Property taxes
- Accounting and bookkeeping costs
- Insurance premiums
- Maintenance and repairs coordination fees
Now that you understand the factors influencing a property’s NOI, let’s dive into the different methods to determine its market value.
How to Determine a Rental Property’s Market Value
You have a handful of tried-and-true options to determine a rental property’s market value. Here are three of the top approaches:
Conduct a Sales Comparison of Similar Properties
Analyze the sales prices of comparable properties in the neighborhood, and consider their type, size, condition, and location relative to the property in question. Make price adjustments based on key differences between the properties, and come up with an educated estimate.
Generally, this approach is more accurate if there have been multiple recent sales of comparable properties within close proximity.
Get an Estimate from a Professional Real Estate Broker
Obtaining a BPO (broker’s price opinion) from a trusted real estate professional can provide insight into a property’s value. Active brokers typically have their finger on the pulse of the real estate market and can estimate property values with reasonable accuracy.
Hire a Certified Appraiser to Value the Property
Certified property appraisers have one job and one job only: to provide an unbiased opinion of a property’s market value using several proven methods. Of the options on this list, going this route usually produces the most accurate market value estimate, but costs the most.
Now that we have the NOI and market value, we can calculate the cap rate for a property.
Formula for Calculating Cap Rate
As a reminder, the formula for calculating cap rate is:
Cap Rate = Net Operating Income (NOI) ÷ Property Value
For context, let’s pretend you’re considering purchasing an investment property valued at $500,000.
When sitting down with the seller, they open up their books and show you that the property had a net operating income of $40,000 and accrued $5,000 in operating expenses over the last year. Their projections, which seem rock-solid, point to a similar year ahead.
By taking the property’s $40,000 NOI and subtracting its $5,000 in operating expenses, we determine the property’s NOI is $35,000.
As mentioned, the property’s value is $500,000.
Because property value and NOI are the only two metrics used to determine cap rate, we can now make our calculation:
$35,000 (NOI) ÷ $500,000 (Property Value) = 7% (Cap Rate)
Is that good or bad? Let’s find out.
Analyzing a Property’s Cap Rate
After calculating a property’s cap rate, you may wonder what to make of the number itself. Below are the typical cap rate brackets and how to interpret properties that fall into them.
Low (5% and Below)
Cap rates below 5% typically represent stable, low-risk properties in proven locations. These properties usually offer dependable rental income and long-term appreciation potential, but limited immediate returns. You’ll pay a premium for predictability and location when purchasing properties with low cap rates.
Example: San Francisco, California (3.8%)
Moderate (5% to 7%)
Typically, properties between a 5% and 7% cap rate strike a balance between income-earning potential and risk. They usually exist in decent real estate markets, show reasonable upside, and are attractive if you’re after a steady cash flow with room for growth.
Example: Denver, Colorado (5.5%)
High (7% and Above)
High cap rates indicate that a property has potential for more substantial cash flow, but often comes with higher risks. These properties may have pressing maintenance needs, higher vacancy rates, or exist in unstable markets. If you’re a sweat equity investor who conducts hands-on property management, these properties may appeal to you.
Example: Memphis, Tennessee (8.2%)
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Factors that Influence Cap Rates
Both property-specific details and overall market conditions determine cap rates. Understanding all the factors at play will help you evaluate risk, compare deals with a high degree of accuracy, and decide whether a property’s potential return matches your investment goals.
Location
Properties in desirable locations with healthy job markets usually result in lower cap rates. Investors in these areas often accept lower returns in exchange for long-term stability, whereas riskier locations require higher cap rates to drum up interest and offset doubt.
Crowded urban markets like San Francisco and New York City often see lower cap rates due to high housing demand and limited supply. In contrast, rural and suburban areas tend to carry higher cap rates due to weaker demand, longer vacancy periods, and pricing volatility.
Type of Property
With different property types come different risks. Multifamily rental units, for instance, typically carry lower cap rates than commercial properties because they have more consistent demand and quicker tenant turnover.
Property size also plays a big part in cap rate. Larger properties (like industrial warehouses) often require more capital to rent, which can drive cap rates higher. Alternatively, smaller residential rentals attract more interested parties, leading to lower, more stable cap rates.
Lease Length and Terms
Long-term tenancies offer landlords predictable and consistent cash flow. As such, properties with reliable tenants on fixed-term leases often sell at lower cap rates. In contrast, properties with month-to-month tenants typically present a higher risk, pushing cap rates higher.
Lease terms also significantly impact cap rate. Triple net (NNN) properties, where tenants cover operating costs, typically reduce landlord risk and lower the cap rate. Properties where the landlord pays for the bulk of expenses shift risk back onto them, and thus push the cap rate higher.
Vacancy Rates
Higher vacancy rates across an area usually signify that a market has weak demand or is oversupplied, which increases risk and, as a result, cap rates. Low-vacancy markets typically mean you can rely on steady income driven by high housing demand, which, you guessed it, decreases cap rates.
A specific property’s vacancy statistics play a part, as well. Steady tenant turnover or long gaps between leases suggest a property has pressing issues you might need to address. Even in strong markets, properties with higher vacancy rates typically result in higher cap rates.
Property Condition
Newer or well-maintained properties usually come with lower cap rates. The need for fewer repairs means more predictable operating costs and an overall lower risk. Older buildings with deferred maintenance may require higher returns to justify future expenses.
While some properties seem profitable, they may require significant maintenance that will eat into a property’s NOI. As such, you should run properties through thorough inspections and adjust cap rate expectations based on estimated repair risks and recurring maintenance costs.
Average Cap Rates Around Major U.S. Cities
As you may imagine, cap rates vary significantly across U.S. markets. To provide perspective, we’ve highlighted estimated 2025 cap rates across 15 major U.S. cities in the table below.
| City | Average Cap Rate % |
|---|---|
| San Francisco, CA | 3.8 |
| New York, NY | 4.1 |
| Los Angeles, CA | 4.4 |
| Seattle, WA | 4.6 |
| Boston, MA | 4.8 |
| Washington, D.C. | 5.7 |
| Atlanta, GA | 5.9 |
| Chicago, IL | 6.2 |
| Dallas, TX | 6.5 |
| Phoenix, AZ | 6.8 |
| Houston, TX | 7 |
| Kansas City, MO | 7.3 |
| Cleveland, OH | 7.6 |
| Memphis, TN | 8.2 |
Common Mistakes When Calculating Cap Rate
Cap rate is only as accurate as the numbers within its equation. While a poorly calculated cap rate can be harmful, it’s also easy to avoid.
Here are some of the most common missteps to consider when calculating cap rate:
Using Gross Income Instead of Net Operating Income (NOI)
Gross income doesn’t account for property-related expenses like taxes, property management costs, insurance premiums, and repairs. NOI gives a clearer picture of what the property actually earns, because it factors in predictable expenses you can prepare for.
Ignoring Vacancy Loss
While we love to dream about a 100% occupancy rate and tenants who always pay rent on time, the reality isn’t so rosy. Even in strong markets, vacancies and missed payments always occur. Failing to account for them will inflate your NOI and predict a cap rate that’s too optimistic.
Underestimating Property Management Costs
If you self-manage your rental property, you must account for accurate property management costs when calculating the cap rate. Time is money, and you may consider hiring a property manager. Consider using software to offload the tedious, manual tasks that property managers charge high rates to complete.
Using Acquisition Cost Instead of Current Market Value
Cap rate reflects the potential return on today’s investment. Using a property’s past purchase price instead of its current market value will alter its cap rate stats, especially if it has taken a significant leap in value since its last purchase.
The Final Word
Cap rate, when properly calculated, can give you a reliable estimate of a property’s income-generating potential. Understanding this simple statistic will help you push aside gut feelings and focus on actual numbers and the story they tell.
Now that you have a firm grasp on cap rate, how to calculate it, and what the numbers signify, use that knowledge to your benefit. Remove emotion from the equation, make informed investments, and watch your portfolio take flight.
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Listen On:
In Episode 103 of Your Landlord Resource, we dive deep into our real-world experience installing property-wide fiber optic Wi-Fi in a six-unit rental property. This isn’t theory—we share what worked, what we wish we knew sooner, and what it all cost. From upgrading a midterm rental and supporting smart locks to giving tenants high-speed access at a fraction of retail pricing, this episode is packed with tips for self-managing landlords.
We break down why Wi-Fi is becoming a top must-have amenity for renters (with 90% of tenants in a 2024 NMHC survey rating it essential), and how landlords can meet that demand in a cost-conscious and scalable way. You’ll learn what types of properties benefit most, how much bandwidth you really need, and how to handle the install without blowing your budget—or your mind.
We cover the technical details landlords need to know, including using VLANs for tenant privacy, installing CAT6 ethernet, and choosing between budget systems like TP-Link or pro-level gear like Ubiquiti. And most importantly, we talk about whether tenants truly value this amenity and if it’s worth the investment.
If you’re a landlord managing a duplex, triplex, or small multifamily and want to offer high-speed internet while protecting your bottom line, this episode is for you.
🧠 What You’ll Learn in This Episode
👉When property-wide Wi-Fi makes sense (and when it doesn’t)
👉The difference between cable and fiber optic internet
👉Required bandwidth based on unit count
👉What VLANs are and why they’re crucial for tenant privacy
👉Product comparisons: TP-Link vs. Ubiquiti
👉Installation pitfalls, hidden costs & hiring IT support
👉Whether to charge tenants separately or bundle Wi-Fi into rent
👉Questions to ask tenants to determine demand for shared internet
🔗 Links & Resources Mentioned
🎧 Listen to Episode 101: Staying Motivated When Work Gets Tough
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By Beau Thoutt
Whenever tax season rolls around—bringing with it all those dreaded forms and reports—many landlords enlist the help of a real estate tax accountant. However, if you’re interested in financial guidance, investment advice, or suggestions on structuring your business, you may want to hire a CPA instead.
A CPA, or certified public accountant, can take on various responsibilities depending on the situation. For example, a CPA might help you minimize your tax liability or restructure your real estate business accounting to maximize your investments.
While tools like TurboTenant or rental accounting software can assist with some of these tasks, hiring a CPA offers certain advantages for landlords who need a broader range of services.
To help you decide whether or not it makes sense to hire a real estate CPA, we’ve put together a guide that covers the basics of what CPAs do, the key benefits of working with them, and how to find the right fit according to your portfolio.
Read on to learn everything you need to know about working with CPAs for real estate.
What is a real estate CPA?
CPAs assist landlords with the many financial and accounting duties of managing rental properties. Depending on the landlord’s needs, a CPA might include handling taxes, advising on purchases, or resolving accounting issues.
Qualified real estate CPAs are highly valuable to landlords and must complete rigorous state-mandated education to become fully licensed. They must also take ongoing courses to stay current on tax codes and other legal changes that affect rental property ownership.
In short, real estate CPAs can take on a wide range of responsibilities. They can represent landlords and property investors before the IRS in the event of an audit. Many also advise on financial decisions beyond tax season, such as investment planning, capital gains strategies, rent collection, and more.
Differences between CPAs and real estate tax accountants
Though the layman often views real estate CPAs and property tax accountants as interchangeable, the two roles differ in key ways.
While property accountants typically receive some form of certification, CPAs hold higher professional designations. As such, they must complete continuing education to stay current on tax laws and code changes. And while most real estate tax accountants only work during tax season, CPAs typically work year-round and provide a wider range of services.
Real estate tax accountants generally have a more limited role in supporting landlords. As a result, many landlords choose to hire a CPA for more in-depth guidance and ongoing support throughout the year.
The Benefits of Hiring a Real Estate CPA
Landlords can use TurboTenant’s free property management software to assist with accounting, lease administration, and online rent collection. However, hiring a real estate CPA may benefit those who need more specialized, professional guidance in managing the financial side of their portfolio.
Tax Expertise
Because CPAs need to pursue continuing education, a real estate CPA will be well-versed in all relevant real estate tax laws. This knowledge helps landlords stay on top of deadlines and other important details, ensuring compliance with changing codes and regulations.
Efficient Business Structuring
CPAs do more than manage taxes. They can help landlords structure their businesses more efficiently, offering insight into whether operating as an LLC, an S corporation, or a sole proprietorship is better. These decisions can lead to significant long-term savings.
Downsizing Tax Liability
Though operating a rental property carries significant tax benefits, you need to know how to use them to your advantage to maximize savings during tax season. CPAs can help reduce your tax liability and navigate complex processes like 1031 exchanges, maximizing your deductions, and capitalizing on other tax advantages to lower what you owe.
Maximize Investment Returns
Real estate ownership of any kind is an investment, and a CPA can help you get the most out of that investment, offering advice to help you maximize profits from your rental property. Some often include guidance on expanding their clients’ rental portfolio, while other investment property tax accountants provide insights on market trends and creative financing options.
Professional Networking Opportunities
Any CPA worth their salt typically works with a broad network of other professionals in the real estate industry, such as real estate agents and attorneys. Hiring a real estate CPA makes it easier to connect with other trusted, qualified experts when you need help with another part of managing your rental portfolio.
Long-term Financial Guidance
As helpful as real estate tax accountants may be, CPAs typically assist landlords with many aspects of managing their rental portfolio beyond taxes. So, if changes or unexpected issues arise, a CPA can help the landlord navigate anything that might impact their portfolio or real estate business.
Detailed Record Keeping
As a landlord, you always have a lot on your mind, and the last thing you want to do is spend your free time juggling receipts and records.
As professional landlord tax accountants, CPAs help clients maintain thorough, detailed records of all financial aspects of their business, which saves landlords valuable time and provides peace of mind if unexpected issues arise, such as audits.
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Do you need to hire a real estate CPA?
As valuable as working with a real estate CPA can be, it’s natural to wonder whether you truly need one. After all, CPAs don’t offer their services for free, and hiring a property investment accountant can be costly.
You can use TurboTenant’s easy-to-navigate rental property accounting software to handle some of the tasks a CPA would perform.
However, landlords who want the more human aspects of working with a CPA, such as personalized investment advice or qualified IRS representation, may still prefer to hire an accountant for property owners.
CPAs can be especially helpful for landlords dealing with complex tax or business situations, such as purchasing real estate through a trust or buying property in a foreign country. Landlords who find accounting overwhelming may also want to work with a CPA to reduce the stress of record-keeping and avoid potential audits.
Ultimately, you’ll need to decide whether hiring a real estate CPA is worthwhile or using real estate accounting software like TurboTenant or REI Hub can get the job done.
How to Hire a Real Estate CPA
Ideally, you know someone who already works with a CPA and can rely on word-of-mouth referrals to find the right fit.
If you’re starting from scratch, a simple Google search should be enough to get going. Just be sure to look for reviews and other references that speak to a CPA’s expertise.
Beyond reviewing a CPA’s track record, you’ll need to consider several other key factors during your search. Choosing the right CPA depends largely on what you hope to gain from the relationship, so keep these concerns in mind as you decide.
Billing and Fees
First and foremost, you’ll need to make sure the CPA you choose fits within your budget. When speaking with a potential CPA, ask how much they charge, when, and if there are any bonuses or additional fees that may apply in certain situations.
Some CPAs charge flat rates, others bill by the hour, and some add fees for more complex services. Understanding all aspects of their pricing structure is crucial before moving forward.
Licensing and Specializations
As mentioned, CPAs must complete state-mandated education and stay current on continuing education requirements to remain licensed. However, some CPAs hold additional licenses or certifications, which can be helpful for landlords who need more specialized services.
For example, a CPA might also have a real estate license, which is useful for those seeking property investment advice. Some CPAs may focus on residential real estate, while others specialize in commercial properties. Understanding these specializations can make a big difference in finding the right CPA for your needs.
Tax Planning Services
When hiring a CPA, landlords should determine whether their services include tax planning and tax return preparation. Though the two may sound similar, tax planning is a longer-term process that takes place throughout the year and often requires more involvement from the landlord and the CPA.
Landlords should also ask who at the CPA’s office will be responsible for filing the taxes. CPAs don’t always handle the entire process themselves, so it’s essential to confirm that the person preparing and submitting the return is competent, experienced, and properly supervised.
Approach to Investing
Like all investors, some CPAs take an aggressive approach to growing their clients’ real estate businesses, while others are more risk-averse. This is an important factor to consider when choosing a CPA, as you’ll want to work with someone whose values and investment goals align with yours.
CPA Agreement
When you decide to work with a CPA, you’ll need to create a CPA agreement, ensuring that both parties understand their roles and responsibilities. Doing so clarifies all key details of the relationship between the CPA and the landlord, prevents misunderstandings, and ensures expectations are clearly defined on both sides.
Real Estate Software: Your New Tax Accountant?
Regarding the financial side of managing rental properties, working with a real estate tax accountant can be helpful. However, hiring a CPA may offer even greater benefits for landlords who want to stay current on property tax laws, receive year-round financial guidance, and maximize their investment portfolio.
To streamline the process of managing your rental properties, consider using TurboTenant’s free landlord software. The platform includes tools like lease agreement management and rent collection, helping you operate your rentals with less hassle.
Sign up for a free account to learn more.
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By Scot Aubrey
When you hear the word “rot” in relation to real estate, all sorts of bad visions and horror stories immediately come to mind.
In fact, that word often translates in our minds to money, as in, how much is it going to cost me to repair whatever is rotting. Allow me to introduce a new way of looking at this word in a much better way, one that when done right, can actually add to your bank account rather than being a drain on it.
While every investor is intimately familiar with ROI, return on investment, which carries a great weight when evaluating a property, many may disregard an equally crucial factor, and that is ROT, or return on time.
For purposes of this article, we will examine return on time to help you become an even more successful and satisfied investor.
Gut Reaction
If you will, please take the next thirty seconds and stop reading.
I want you to think about your portfolio by specific address if you can and think of or say aloud the address of one of your investments.
How do you feel when you hear that address? Many of you probably have that “perfect” property that houses great tenants who pay on time and even manage some of the most common maintenance items out of their own pocket. This property brings a smile to your face and good feelings, knowing that it is an asset that provides a great return on both your time and your investment.
Others of you had a physical, maybe even violent reaction when you thought of a property that is less than your ideal. Tenants that pay late consistently, that call you for even the simplest repairs, which cause friction with their neighbors. You know the one because it takes up an inordinate amount of your time and more than once you have considered offloading it, and its attendant problems, out of your portfolio and your life.
The Analysis
While return on time is an often-overlooked real estate investor metric, it needs to play a critical role in your decision-making, particularly when time is limited.
After all, time is money and every second you spend managing a property with a low ROT can feel like a total waste because you are sacrificing time that could be spent with family, on a hobby, vacationing or finding your next great property.
While there is no universal formula for ROT, you can begin by evaluating the benefits, satisfaction, or personal wealth derived from the time spent on a specific property. Time is finite, and therefore, optimizing how time is spent is just as important as financial investments.
ROT focuses on the time and the intangible returns that come from using time effectively. ROT is based on the principle that time, like money, is a limited resource. Time cannot be bought back once spent; therefore, ROT considers the opportunity cost of how time is spent.
Is the time spent working on a project worth the long-term value or the personal satisfaction gained from it? That is the key question in any analysis you perform with ROT in mind.
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A Balanced Approach
Decision making focused solely on ROT could result in the neglect of profitable opportunities if that is the only metric considered.
Every investment you approach has to include a thorough look at the financial AND time aspects required to create a positive return.
For example, let’s say you found an underpriced property in a great neighborhood, but the home needs an extensive remodel to make it appealing to the majority of the market.
You also found a home in the same neighborhood that is turn-key ready but costs 75% more than the fixer upper. ROI and ROT would be evaluated when deciding between these two projects—one that offers a higher ROI but requires more time, and another that is less lucrative but can be completed more quickly. Only you can determine how much each factor weighs into your decision-making process, but both must be a major component of your final determination.
Conclusion
While both ROI and ROT are critical for evaluating decision-making in both personal and professional contexts, they serve different purposes. A lot of other factors will influence your investment path as well.
Is this a hobby or profession? What is your age and how many years left do you have to grow your portfolio? What kind of financial backing do you have if things go sideways?
These questions, and so many others can help you determine how and when to use ROT as a measurement in your present and future investing. And if you are still feeling heartburn from the earlier exercise where you thought about your portfolio, be bold enough to cut out the rot and move on to an investment that brings you both joy and financial freedom.
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Listen On:
Summer brings sun, sizzle… and safety responsibilities for landlords. In this episode, we are giving you a fast-paced roundup of our best summer reminders to protect your property, keep your tenants safe, and stay legally protected.
We cover everything from fireworks laws and grilling guidelines to guest liability and servicing your air conditioners. With the 4th of July approaching, it’s a great time to double-check your lease terms, share safety policies, and confirm insurance coverage. We also talk about how to help your tenants beat the heat, and why early prep can make or break your summer maintenance game.
You’ll also hear about tax-saving tips for employing your kids over break and why preventative maintenance should happen in the spring—so your summer is smooth sailing.
🔍 What You’ll Learn in This Episode:
- What to remind tenants before their 4th of July celebrations at your rental property
- How to prep your HVAC system for summer efficiency
- How grilling, guest, and pet policies affect liability
- Why hiring your kids or grandkids to help is smart business
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👉 Download: 4th of July Tenant Safety PDF
📌 Download: Heatwave Email Template
✔️ Download: Spring Maintenance Inspection Checklist
🎧Listen: Episode 65, 4th of July and Summer Safety Tips for Tenants
🎧 Listen: Episode 9 Helping Tenants Cope Through Heatwaves
🎧 Listen: Episode 5 The Advantages of Employing Your Children
🎧 Listen: Episode 3 Spring Maintenance Checklist for Rental Properties
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Listen On:
In Episode 101 of Your Landlord Resource, we pick up where we left off in our 100th episode and dive into the “how” behind pushing through hard times as landlords.
From unexpected repairs and long vacancies to personal setbacks and stalled growth, we’re sharing how we’ve stayed motivated—even when the work was overwhelming. This episode is packed with mindset shifts that helped us learn to love what the work does for us, even when we didn’t love the tasks themselves.
We also walk through what it means to “think like a CEO” in your rental business. That means learning how to gather and use data—from vacancy rates to tenant behavior—to make smart, strategic decisions without relying on emotion or guesswork.
Whether you’re struggling to fill a unit, debating a rent adjustment, or navigating a season of hustle, we’re giving you practical ways to stay grounded, clear, and motivated. If you’ve been wondering how to keep going when the work gets tough, this episode is for you.
🧠 What You’ll Learn in This Episode
Mindset Shifts – Why leaning into tough tasks is the steppingstone to financial freedom and time flexibility.
Seasons of Hustle – How to recognize & navigate “build” vs. “growth” phases in your rental business.
CEO Thinking – Using resourcefulness, data, and strategic pivots instead of emotion when setbacks hit.
Data Collection – The exact metrics to track (vacancy rates, repair costs, tenant behavior, market comps) and how to gather them.
Tech Tools & Apps – Which property‑management platforms (TurboTenant, EZ Landlord, RentRedi, Innago) can streamline rent collection, leasing, and reporting.
Preventative Maintenance – Tips on termite inspections, garbage‑disposal care, and more to save thousands long term.
Pivot Opportunities – Our results on midterm rentals, addendum customization, and turning challenges into strategy.
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➡️ Review the Podcast on Apple or on Spotify or YouTube (be sure to use your name so we can match it to your entry!)
🎧 Listen to Episode 100: Landlording Through Personal Challenges
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🎧 Listen to our 3-Part Masterclass on Leases: Episode 32, Episode 33, Episode 34
Connect with Us:
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📧 Subscribe to our newsletter.
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Provided by Bent Nail Inspections
What Qualifications Should I Look for When Choosing a Home Inspector?
Buying or selling a home is a significant decision, and choosing the right home inspector is essential to ensure a smooth and informed process. But with many inspectors to choose from, how do you know you’re making the best choice? This guide outlines the key qualifications for selecting a home inspector, helping you secure the expertise needed for a comprehensive inspection.
Licensing and Certification
The first and arguably most important qualification to verify is whether the home inspector is licensed. While not all states mandate home inspector licenses, hiring a licensed professional is crucial for those that do. A licensed inspector has met the state’s specific requirements, including completing formal training and passing a rigorous exam.
In addition to licensing, certifications from well-known organizations can distinguish an outstanding home inspector. Some certifications to look for include:
- International Association of Certified Home Inspectors (InterNACHI)
- American Society of Home Inspectors (ASHI)
- National Institute of Building Inspectors (NIBI)
These organizations require ongoing education, adherence to industry standards, and a commitment to ethical conduct. By choosing a certified inspector, you ensure they stay current with industry practices and techniques.
Experience Matters
While licensing and certifications provide a solid foundation, experience is invaluable. An inspector with several years in the field has likely encountered many issues and is better equipped to identify subtle or hidden defects. When interviewing potential inspectors, ask questions such as:
- How many years have they been inspecting homes?
- How many home inspections have they conducted?
An experienced inspector offers more comprehensive reports, spotting problems that someone with less field experience may overlook. This experience can also translate into practical advice to save you money.
Specialized Training
Not all homes are the same, and depending on your property’s unique characteristics, you may require an inspector with specialized expertise. For example, consider inspectors trained in:
- Radon testing
- Mold inspections
- Pest inspections
- Energy efficiency evaluations
Choosing an inspector with expertise relevant to your property ensures a more thorough and accurate assessment, particularly if the home has specific risk factors that need closer attention.
Insurance Coverage
Professional liability insurance, or Errors and Omissions (E&O) insurance, is a critical safeguard when hiring a home inspector. This insurance protects you in case the inspector misses a significant issue during the inspection. Always ask about the inspector’s insurance coverage and verify that it’s current and adequate for the job.
Attention to Detail
A qualified home inspector leaves no stone unturned. They should thoroughly assess the home’s major systems, structure, and components, including:
- Foundation
- Roof
- Plumbing
- Electrical systems
- HVAC systems
A rushed inspection may overlook important issues, while a well-conducted inspection typically takes between 2 to 4 hours, depending on the size and complexity of the home. Ensure the inspector you hire will take the necessary time to do the job right.
Have You Considered a Home Warranty for Your Rental Property?
Essentially this is insurance for your appliances, HVAC, as well as for pools, septic’s, and more. Home warranties can help landlords with:
- Budget management: Landlords can avoid unexpected repair costs and make budgeting easier.
- Quality and longevity: Licensed professionals perform repairs, which can help maintain the quality and longevity of the property.
- Tenant satisfaction: Tenants can be confident that issues will be addressed promptly and professionally, which can contribute to a positive landlord-tenant relationship.
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Clear and Comprehensive Reports
One of the most critical deliverables of a home inspection is the report. Make sure your inspector provides a clear, well-organized, and easy-to-understand report. The best reports include:
- Photographs highlighting issues
- Summaries of the home’s overall condition
- Descriptions of potential future problems
- Recommendations for repairs or maintenance
Additionally, ask if the inspector provides digital reports and whether they can answer any follow-up questions after the inspection is complete.
Positive Reviews and References
A track record of satisfied clients is another good indicator of a qualified home inspector. Check online reviews and testimonials to gauge the inspector’s reliability and professionalism. Look for consistent praise in areas such as:
- Punctuality
- Thoroughness
- Communication skills
- Willingness to answer questions
Choosing the right home inspector is vital for protecting investment and gaining peace of mind. Ensure they are licensed, certified, experienced, and have adequate insurance. Don’t hesitate to ask questions and verify their qualifications through reviews and references. A good home inspector will provide a detailed report and offer clear explanations, empowering you to make well-informed decisions about the property.
Your home deserves the best inspection. At Bent Nail Inspections, we pride ourselves on being certified and experienced professionals committed to providing thorough inspections and detailed reports. Let us help you safeguard your investment and make the best decisions for your property. Schedule your inspection today!
FAQs about Home Inspector Qualifications
Q: Should I hire an inspector who specializes in older homes?
A: Yes, if you’re purchasing an older home, hiring an inspector with experience in older properties can help you spot age-related issues like foundation settling, outdated electrical systems, or plumbing concerns.
Q: What happens if my home inspector misses something?
A: This is why hiring an inspector with liability insurance is crucial. Their Errors and Omissions (E&O) insurance can protect you if something critical is missed.
Q: How many certifications should a home inspector have?
A: While one certification from a reputable organization is often sufficient, additional certifications in specialized areas can provide extra assurance of their expertise.
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Provided by Bigger Pockets
After reaching an all-time high in 2007, single-family home prices collapsed 27.4% until hitting a low in 2012. Since then, the Case-Shiller U.S. National Home Price Index has exploded by 141.23%.
Don’t you wish you had a time machine and could buy a home at 2012 prices?
You don’t, and you can’t, of course. But you can invest in another type of real estate that’s coming off a similar collapse in prices.
Multifamily apartment building prices have fallen by 23.5% since reaching a peak in July 2022, according to CoStar. The Freddie Mac Multifamily Apartment Investment Market Index (AIMI) fell 28.1% before bottoming out and starting to rise again.
And you don’t need millions of dollars to invest in multifamily properties. You can invest fractionally with $5,000 and enjoy all the cash flow, appreciation, and tax benefits of ownership.
Why Multifamily Looks Like It’s Bottomed Out
First, take a moment to remember the narrative around real estate in 2011-2012. The mood was bleak—all you read were doom-and-gloom headlines, and the narrative was all negative. In other words, there was “blood in the streets.”
Today, you are in the same mood in multifamily real estate. Investors are running scared after three years of capital calls and distressed sales.
Every investor knows the famous Warren Buffett’s advice to “be fearful when others are greedy, and greedy when others are fearful.” But the mood among investors is far from the only reason to consider multifamily right now.
Dropping construction starts
What drives market prices? Supply and demand—and multifamily housing supply rose sharply between 2021-2025.
But after peaking at 614,000 in late 2022, multifamily unit housing starts have dropped to 370,000 as of February. You can thank the “blood in the streets” for that.
In 2024 alone, new multifamily construction starts fell by 25%.
So yes, the U.S. saw a lot of housing construction post-pandemic. But that surge in new construction has passed and crashed, while the country remains in a housing shortage.
Continued housing shortage
Rising rents
A 2024 report by Zillow estimated that the U.S. is still short 4.5 million housing units. Most markets don’t have to worry about an oversupply of housing. Quite the opposite.
Multifamily prices are calculated based on rental income. And rents keep rising faster than inflation. In fact, rents are one of the primary drivers of inflation. As of February, rents nationwide are up 4.2% year over year.
Rising prices
After hitting a low in 2024, multifamily prices have started rising again.
The Commercial Property Price Index (CPPI) index, calculated by MSCI Real Capital Analytics, shows multifamily properties hitting a low in February 2024, leveling out over the next few months, and rising since.
The CPPI also shows multifamily prices far below their long-term trend line:
That means they have some serious catching up to do, marking now as the perfect time to buy into the market.
Multifamily cap rates are starting to compress again
After seeing how low they could go in 2021, multifamily cap rates expanded sharply from 2022-2023. But in 2024, they stabilized, and in the second half of the year started shrinking again, according to the CBRE’s 2024 Cap Rate Survey.
As a refresher, cap rates are the other part of the price equation for commercial real estate. You divide a property’s net operating income (NOI) by the cap rate to come up with the value.
Lower cap rates mean higher prices. So, one of the drivers of rising multifamily prices is cap rates turning around and compressing again.
How to Invest in Multifamily Without Betting the Farm
I get it: There’s a lot of uncertainty in all financial markets right now, real estate included. The Trump tariffs and trade wars, as well as recession uncertainty, all make for fearful investors. So, how can you invest in multifamily while keeping your risk in check?
Invest small amounts
If you invest in a multifamily syndication yourself, it typically requires a minimum investment of $50,000 to $100,000. I don’t like that. So, I go into these investments with other people through a co-investing club.
It’s how I practice dollar-cost averaging with my real estate investments, steadily investing $5,000 each month.
Protect against recession risk
Some investments are recession-resilient, continuing to thrive even during downturns.
For example, I’ve invested in mobile home parks with tenant-owned homes. If a renter has to choose between paying a $500 lot rent and paying $6,500 to move their mobile home, which do you think they’ll pay?
Likewise, I’ve invested in multifamily properties that get a property tax abatement for setting aside 50% of their units for affordable housing. Those units have a waiting list—imagine how much more the demand would rise in a recession.
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Here are other recession-resilient real estate investments for more examples.
Don’t count on compressing cap rates
The trend line looks positive for cap rates compressing again. But I’m still not counting on that for the success of my investments.
In my club, we generally like to see strong cash flow in the multifamily investments we vet. We like collecting distributions, like properties that don’t rely on price improvements for returns.
With strong cash flow, the operator (and you) can sit back and hold the property long term, waiting out rough patches—all while collecting plenty of rental income.
Diversify with other property types
Yes, it looks like a great time to buy multifamily properties. But you should look to diversify your portfolio. That includes taking a look at industrial properties, mobile home parks, raw land, hotels, and vacation rentals.
I don’t have a crystal ball, so I can’t predict the next hot asset class. And I don’t have to because I invest in so many different types of properties.
Diversify across states
I have cash tied up in over 30 properties across 13 states and counting.
Again, no one knows where the next “hot” market will be. Who cares? Spread your money across many geographical markets, and you’ll catch some of the hot ones.
Diversify across other passive investments
Syndications are just one type of passive real estate investment but aren’t the only option. You can also invest in private partnerships, private notes, secured debt funds, and real estate equity funds. That also helps you invest for different timelines, including some investments as short as nine months.
Final Thoughts
Multifamily properties experienced a bear market from 2022-2024, along with the losses and fear that come with them.
The bottom of a bear market doesn’t look and feel optimistic yet. The press and mood remain mostly negative at the bottom before it becomes obvious to everyone a new bull market is starting. That’s precisely the time to buy in.
As someone who invests steadily every month, I don’t advocate trying to time the market. But as far as I can tell, most market metrics are signaling the bottom of the bear market and the beginning of a new bull market in multifamily.
It doesn’t feel like the giant party that it was in 2021. And that’s precisely what makes it a better time to buy.
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Provided by AAOA
Bed bugs were in the news last fall when infestations appeared throughout Europe, particularly in France.
Zachary DeVries, associate professor of urban entomology at the University of Kentucky, recently told Multifamily Dive that the bugs — flat, brown creatures that tend to nest in furniture and feed on human blood — “have been a consistent and steady issue in homes, apartments and hotels since their population in the country surged in the late 1990s, likely owing to an increase in international travel and restrictions on indoor insecticides.”
Bed bugs can nest anywhere, including five-star hotels and first-class airline seats, but infestations are most commonly seen in low-income housing. DeVries owes this phenomenon to the cost of removing bed bugs, especially when that burden is placed on residents.
Bed bugs feed on human blood and can cause redness, itching, and allergic reactions. They can travel from one apartment to another, making it hard to get rid of them. If the landlord is not informed of the bed bugs’ presence, the tenant may risk getting evicted for failure to maintain a clean living environment.
How to prevent the spread of bed bugs
One important thing to impress upon residents is the danger of bringing in secondhand furniture, particularly if it’s been sitting outside. “That’s probably one of the easiest ways that [bed bugs] get brought in,” DeVries said.
Ben Hottel, entomologist at Atlanta-based pest control company Orkin, suggests the following strategies that properties can use to prevent bed bug infestations:
- Conduct regular inspections. “It’s best to first look for actual live bed bugs [first] and then signs of bed bugs such as blood stains, fecal matter and discarded exoskeletons,” Hottel said, noting that these signs could also be attributed to other insects.
- Promote cleanliness. Hottel recommends encouraging regular vacuuming and washing of bedding.
- Eliminate hiding places. This includes filling in cracks in plaster or drywall, removing wallpaper and repairing loose molding.
- Encourage residents to use special bed covers. These are designed to protect mattresses and box springs, and to make inspections and treatments easier.
It is a tenant’s responsibility to report the presence of bed bugs as soon as they are discovered. In turn, the landlord is legally responsible to quickly take appropriate measures to eliminate the bugs. They must take the issue seriously, respond swiftly and provide their other tenants with information about the bed bug infestations and their eradication since bed bugs can travel from one unit to another, making it very hard to get rid of them.
Legally, landlords are responsible for covering the costs of bed bug elimination. In some states, tenants have the right to withhold rent until the landlord fully resolves the bed bug issue. Tenants can also demand compensation from the landlord for the loss of personal belongings damaged by bed bugs or to cover any expenses incurred in temporarily relocating.
The legal and health issues roaches bring with them
By law, landlords must maintain a healthy, habitable living environment for their tenants, which includes ensuring there are no pest infestations. Neglecting to handle a roach infestation can lead to legal trouble, with tenants possibly suing for breach of contract or negligence.
In addition to their legal obligations, landlords may face code violations and fines from local health departments if they fail to keep their rental properties free of roaches. As a result of these violations, landlords may face hefty fines, legal action, and in extreme cases, property condemnation.
Cockroach infestation has little to do with cleanliness and mostly to do with how many are in the building. Roaches can cause many health issues for tenants, including asthma and other respiratory problems. As roaches crawl around, they tend to transport bacteria, germs, and diseases from one surface to another, including the surfaces in rental properties. They have the potential to transmit salmonella, e. coli, and other harmful bacteria, leading to food poisoning, diarrhea, and other infections. They can also trigger allergies in some people, causing sneezing, runny nose, itchy eyes, and skin reactions.
The only real method of eliminating roaches is to tent the entire building and fumigate, and landlords rarely want to do that due to the expense.
According to RentVision, if a tenant has notified their landlord of a roach infestation and the landlord fails to take corrective action within a reasonable amount of time, the tenant may be able to stop paying rent without penalty. This is known as “rent withholding,” and it is a legal option for tenants who believe their landlord has violated their right to a habitable living space.
How can I know if my rental has termites?
Termites are destructive pests that can cause significant damage to the structure of a building and can also pose health risks to its occupants. If your rental property has a termite infestation, your tenants have the right to take legal action against you.
According to Rental Awareness, termites are small, wood-eating insects that live in colonies, thrive in moist environments and feed on cellulose materials, which are commonly found in wood structures. Due to their ability to remain hidden and their insatiable appetite for wood, termite infestations can go unnoticed for long periods, causing significant damage to the infrastructure of a property.
If you want to determine whether your rental property is infested with termites, there are several signs you should look out for:
- As termites consume wood, they can cause wooden fixtures to warp, leading to difficulties in opening or closing windows and doors.
- When termites swarm, they shed their wings, which may be found near windowsills, light fixtures, or other areas where they are attracted to light.
- Termites build mud tubes to travel between their nest and food source. These tubes are typically brown or gray and can be found along walls, foundations, or other surfaces.
- Termites feed on wood, causing significant damage over time. Look out for wooden structures that sound hollow when tapped or have a honeycomb-like appearance.
- Termite droppings, also known as frass, resemble tiny wood-colored pellets. They may be found near termite tunnels or other areas infested with termites.
- Inspect the interior of your rental property. Pay close attention to areas where there is wood, such as baseboards, windowsills, door frames, and wooden furniture.
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What is a landlord’s exposure with regard to infestations?
Landlords often try to blame their tenants for an insect infestation. However, an infestation of bed bugs, cockroaches or termites is not an issue to be ignored and legally you are bound to address the issue properly. If you fail to deal with the situation and/or do not compensate your tenant for the damages and losses incurred, they may file a lawsuit against you.
Per Rental Law Awareness, while the specific provisions can vary, they typically outline the duties of landlords to mitigate, control, and remediate termite infestations. Violation of these laws can result in legal consequences for the landlord.
The specific duties may vary depending on local laws and regulations, but generally, landlords are expected to:
- Maintain the property in a habitable condition, free from infestations that can affect the health or safety of the tenants.
- Take prompt action to eradicate the insects and prevent further damage.
- Conduct regular inspections to identify and address any signs of bed bug, roach and termite activity.
- Provide necessary repairs and treatments to eliminate the insects and restore the property to a habitable state.
If a landlord has been unresponsive or negligent in addressing the infestation problem, poses a risk to their tenant’s health and safety, or refuses to compensate them for damages caused by the infestation, it may be necessary for the tenant to pursue legal action.
If the landlord fails to address the bed bug infestation, the tenant may be able to terminate the lease without penalty. They can also file a complaint with the local health department or the housing authority. In some cases, tenants may need to escalate disputes to small claims courts or hire legal representation to file a lawsuit against the landlord for breach of contract.
Disclaimer: All content provided here-in is subject to AAOA’s Terms of Use. Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. AAOA recommends you consult with a financial advisor, tax specialist, attorney or other specialist who is able to properly advise you.
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