How to Use Zillow for Investment Property Analysis

Zillow isn't built for investors, but it holds most of what you need to screen rental properties quickly: prices, rent estimates, tax records, HOA fees and sale history. Use it to narrow a long list down to a few properties worth a closer look.

1. Find candidates

• Draw a search area on the map around neighborhoods you know.
• Filter by price, beds and baths, and property type.
• Zillow Price/SqFt adds a price per square foot badge to every listing card, so you can spot homes priced low for their size.

2. Gather the numbers

• Rent: Zillow's Rent Zestimate, checked against actual rental listings nearby. See the Rent Zestimate.
• Taxes: the tax history on the listing. They may rise after a sale, as the home is reassessed.
• HOA fees: shown on the listing where they apply.
• Price history: price cuts and past sales show how the market sees the property.

3. Run a quick screen

A common rule of thumb is the 1% rule: monthly rent of at least 1% of the price. It's a quick filter, not a decision, and few homes meet it in expensive areas.

4. Work out the cap rate

Cap rate is the yearly net operating income (rent minus operating costs, not including the mortgage) divided by the price. For example:

• Price: $300,000. Rent: $2,400 a month, or $28,800 a year.
• Allow 5% for vacancy: $27,360 collected.
• Costs: taxes $3,600, insurance $1,500, maintenance $2,400, management at 8% about $2,190. Total about $9,690.
• Net operating income: about $17,670.
• Cap rate: $17,670 ÷ $300,000 = about 5.9%.

The cap rate calculator does the math. Compare the result with other properties and with what you could earn elsewhere.

5. Add financing

Subtract your mortgage payments from the net income to get cash flow, then divide yearly cash flow by the cash you put in (down payment, closing costs, repairs) for your cash-on-cash return.

What Zillow can't tell you

• The condition of the roof, plumbing, electrics and foundation; get an inspection.
• Local rules on rentals, rent control or short-term letting.
• Real vacancy rates and how fast rentals fill nearby; ask local property managers.
• Insurance costs, which vary widely by location and risk.

This is an example for learning, not investment advice. See spotting overpriced homes and researching a neighborhood.