The Zillow rental estimate tool is popular among real estate investors looking to estimate the rental rates of their investment property. However, due to its popularity, beginner investors often rely too heavily on Zillow’s data without realizing that the smallest inaccuracies may cost them financial losses.
With a number of alternatives—like Mashvisor—that are available to any investor, how does the Zillow rental estimate tool compare?
In this article, let’s take a deeper look at the rent estimate tool that Zillow offers, how accurate it is, and what other features it offers compared to its competitors.
What Is a Rent Estimate Tool?
Before delving into Zillow rental estimate tool, let’s first talk about what an investor should expect from a rental property calculator tool in general.
Usually, when a rental real estate investor wants to buy a house to rent it out for profit, they will need to know how much rent they can set on the property to make the most profit. With no access to historical data on the property, the only way for investors to know that info is by running a rental comp.
A rental comp is when you collect data on similar properties in the same market and compare their rental rates to get an idea of the amount of rent you can charge. So, how to find rental comps? Tools like Zillow and Mashvisor easily come to mind.
Both platforms gather massive amounts of data from numerous sources in order to provide their users with rental comp data. At their core, both tools provide the same main feature of comparing rental properties in the market to give you a rent estimate for the property you’re interested in.
While it is the basic level of what a rental calculator like the Zillow rental estimate tool can do, the capabilities of such a tool can vary significantly depending on the amount and type of data that it is utilizing. So, let’s talk about the tools in detail and how they utilize their data in different ways to provide different levels of insights and accuracy to the user.
Related: Want an Accurate Rent Estimate? Landlords Use This Tool
Mashvisor vs Zillow Rental Estimate Tools
As mentioned previously, both Zillow and Mashvisor offer similar tools for estimating the rental income of a property. However, each platform is different in how it uses the data it collects, in addition to its unique features.
Since we are reviewing the Zillow rental estimate here, we’ll start with looking at its main features before talking about its pros and cons compared to Mashvisor.
Rental Income Calculator
Zillow’s tool, which is called Rent Zestimate, estimates a property’s monthly rental rate using algorithms that considers the following factors:
- The home’s physical characteristics and amenities, including its square footage, number of rooms, and heating/conditioning systems
- Rental comps in the area
- Any additional information provided by the homeowner or public sources
Using the above data, Zillow will then determine a rent range and give the middle of the difference between the two numbers. For example, if a property’s rent range is between $1,000 and $1,600, Zillow’s insights will give a rent estimate of $1,300.
Disadvantages of Using Zillow’s Calculator
However, a major challenge when using the Zillow rental calculator is that the accuracy of the data can vary significantly based on the amount of data the platform collects on each market. So, in areas where Zillow doesn’t collect much data, the rent range gap can be much greater, resulting in a larger margin of error.
Another challenge that Zillow faces is that it does not accurately assess the change in the value of a home after certain modifications or renovations were made to it.
Many house changes will naturally require a permit, which will often result in that information being passed along to the property tax authorities and entered into the public record. However, since the rental property calculator can only update its listings data when new information becomes available, two issues arise as a result:
Firstly, some changes may not need a permit, which means that the information may not be passed to the public data that Zillow can access. In such a case, Zillow relies on the property owner to report the changes to the platform so that the listing can be updated.
It is where the second issue appears, however: Zillow’s estimate of the change in the value of the property may not be accurate as it will lack information on the same type of change and its effect on other properties in the area.
When you look at the bigger picture and consider that most of Zillow’s data is interconnected with such possible errors, you will realize that the Zillow rental estimate tool can provide varying degrees of inaccuracies.
Related: Rental Comps: What Are They and Where Can I Find Them?
Compared to Mashvisor
The Zillow rental estimate tool comes with two major disadvantages compared to Mashvisor, such as:
- Zillow doesn’t use a cap rate or cash on cash return calculator.
- Zillow only provides its rental comps data per address, so you can’t rely on it when searching for an investment property to buy.
When it comes to the rental property calculator, Mashvisor’s cash on cash return calculator is far superior in terms of the insights it gives to the user. Not only does Mashvisor provide similar data in terms of the property’s details, rent estimate, and price, but it also tells you what the potential return on investment will be.
Since the cap rate and cash on cash return are such key metrics for any rental property investor, Mashvisor provides the convenience of pre-calculated cap rates for each property where there is available data.
In addition, Mashvisor gathers its data from similar sources, but it also includes data from trusted and up-to-date MLS database as well as from Airbnb. It means that Mashvisor possesses much more data that can be used in its advanced algorithms to estimate rental rates with greater accuracy.
Additionally, when using Mashvisor, you can base your entire search around finding properties with good cash on cash return. It is because you don’t need to request rental comps in order to get results for each property separately, like with the Zillow rental estimate tool.
Instead, by visiting any property’s page, you will find all details about it included in the rental income calculator as well as rental comps for that property and similar properties around it.
Investment Property Finder
In addition to the Zillow rental estimate tool, the platform offers tools and features to help you list or find listed properties for sale on its site. It is one of the most popular uses of Zillow as a whole, and it is common for people to use the platform’s price estimates as a standard when searching for an investment property. However, as mentioned previously, Zillow’s data isn’t always accurate, which makes relying solely on its data problematic.
Since Zillow relies heavily on the data provided by its users, such as when updating their property’s info and public details, there can be a lot of room for error in terms of the listed prices. As a result, users will be compelled to consult a real estate agent or hire an appraiser before committing to a single property to avoid making an offer that is way off the actual value of the dwelling.
All things considered, Zillow offers all the basic and standard features that you would expect in a property finder tool, including filters to search for properties based on their:
- Listing price
- Property type (single-family home, condo or coop, etc.)
- Size
- Number of rooms
- Condition
Coupled with a simple map feature, any investor should be able to use the tool to find properties for sale easily.
Compared to Mashvisor
Like Zillow, Mashvisor allows homeowners and sellers to list their dwellings for sale on the platform.
The advantage, however, is that Mashvisor provides excellent tools to help buyers and investors search for properties to purchase. In fact, the platform offers three different tools that you can use to find listings for sale:
- Investment Property Search
- Property Finder
- Property Marketplace
Mashvisor’s search tool is a very sophisticated yet easy-to-use map tool that includes a wide range of filters to help you narrow down your search, including:
- Price range (up to $5 million)
- Projected cash on cash return
- Property type (single-family, multifamily, condo/townhouse)
- Square footage
- Year built
- Number of bedrooms
- Number of bathrooms
- Status (including foreclosed)
Additionally, the tool comes with a real estate heatmap feature that lets you analyze markets based on their:
- Traditional cash on cash return
- Airbnb cash on cash return
- Traditional rental income
- Airbnb rental income
- Airbnb occupancy rate
- Listing price
Related: Airbnb Rentals: Finding Income Properties Using a Heatmap
Mashvisor’s Heatmap tool allows real estate investors to analyze specific locations based on several criteria.
Verdict: Which Tool Should I Use?
The answer is it depends on what you want to achieve. Both tools come with a nationwide property search feature and tell you how to estimate your rental income. However, each tool presents its data in a way that appeals to different types of property buyers and homeowners.
Mashvisor’s multitude of rental analytics features and deep insights appeal more to investors and professionals who want to use every detail of the market to maximize their profits. However, it may also mean that normal home buyers will find the amount of available data overwhelming compared to their particular needs. Such buyers may find Zillow’s simple data sufficient to satisfy their goal of buying an affordable home to use as a primary residence.
But if you’re only looking at the Mashvisor and Zillow rental estimate tools, the former is simply the superior option as it provides analytics that is much needed by any investor. Being able to perform a nationwide property search based on cap rate or cash on cash return can be immensely helpful and can significantly reduce the amount of time and effort needed for investment research.
Another very important thing to emphasize is that Mashvisor also provides data on short-term rentals. It means that users will be able to see data on both rental strategies for each investment property and rental comp on the platform. It gives investors more options since they are able to access data on the relevant rental strategy.
What About the Price?
When it comes to Zillow’s most obvious advantage over Mashvisor, it is that anyone can use Zillow for free. Whether you’re interested in the Zillow rental estimate tool or search engine platforms, homebuyers and investors can access such features without the need to pay a monthly fee. However, the downside is that Zillow doesn’t offer much in terms of advanced analysis tools.
So, if you’re using Zillow and you’re willing to pay extra to get access to analytics based on their data, they do not offer such an option. On the other hand, Mashvisor’s version of the analytics tool does not come free.
Investors who want access to Mashvisor’s rental comps and property analysis must subscribe to one of the available plans, which vary depending on the level of access that they need. However, the platform does offer a seven-day free trial period. This will let you test out the tools and learn the interface before committing to a full subscription.
Finally, investors who use Mashvisor find that it does not disappoint. Many investors pay for access to one of the platform’s tools. They end up being pleasantly surprised after finding that they are able to access additional tools that are extremely useful to them.
Join the growing number of Mashvisor customers and sign up for a week-long free trial, followed by a 15% discount on your annual subscription.