Many New Yorkers are familiar with terms such as sublet, lease break, no fee, etc. However, there are a plethora of other terms and acronyms that are utilized in real estate. For example, the acronym, FRBO. You may be asking yourself, “what does FRBO stand for?” FRBO stands for “For Rent By Owner”. In this article, we’ll cover the FRBO meaning, how it works, the pros and cons, and where to find a FRBO property. 

FRBO Meaning

A property that’s listed for rent by the owner (FRBO), means that the homeowner is the one taking direct responsibility for advertising their property and securing their own tenant. This differs from other rental situations where the current tenant, management company, or a licensed real estate professional such as a broker or agent may be the one advertising the listing. 

How does FRBO work?

How to find a new tenant?

Homeowners who are interested in advertising their property themselves will also have to put in the legwork to find their tenant. They’ll need to attract renters to apply for their listing and vet the prospective renters by checking their qualifications. Overall, there are a few steps to this process. 

Prepare the property

Landlords may prepare their property by ordering a deep clean of the unit, repainting the walls, updating the appliances, etc. These actions are not legally required. However, the landlord should make sure that they take actions to provide their future tenant with a safe, sanitary, and livable home. Note: the preparation of the property isn’t something that’s unique to a FRBO situation. After the preparation steps, the homeowner can take photos of the home. These will be utilized in the next step of the rental process. 

Advertise the property

The FRBO property will have to be listed on different websites such as local Facebook groups or subreddit communities, or rental platforms to attract prospective renters. The costs associated with advertising and marketing the property are usually covered by a management company or by a broker or agent. However, in FRBO situations, this cost is covered by the homeowner. Outside of costs, the homeowner will also need to dedicate their own time towards updating the listing, answer inquiries and questions from prospective renters, etc. 

Vet prospective tenants

As with other rental situations, the homeowner will vet prospective renters by checking their credit score, rental history, employment status, etc. Paperwork and documents that may be requested include an employment verification letter, employer contact, pay stubs, bank statement, a picture ID, recommendation letters from former landlords, more. Homeowners will also run a credit check. The process can be time consuming for homeowners advertising the FRBO. However, both the homeowner and prospective renter will have an opportunity to speak directly to each other. 

Sign a lease

After finding a tenant, the last step of the process will be to make sure that both parties review and sign the lease agreement. 

What are the pros and cons?

All in all, the leasing process is very similar for properties listed for rent directly by the owner. The only major difference is that the homeowner is directly involved and responsible in each step of the process without the help of a third party. There are different pros and cons for the homeowner and renter. It’s important to know these so you can decide for yourself whether or not a FRBO is the right choice.

Pros and cons for a homeowner

Homeowners who choose to advertise their own listing are saving a lot of money towards hiring a third party such as a management company, licensed real estate broker, or agent. They will also have more control over the vetting of prospective renters. However, the process of renting out a property can be time consuming and daunting, especially if it’s the homeowner’s first time. It takes time to find contractors to prepare the home, take photos, advertise, speak to renters, schedule and attend showings, and vet the prospective renters. Not to mention, costly. 

Hiring a third party who already has the know-how and experience can quicken the process. Management companies and licensed real estate professionals will already have contractors they work with. They will also have prepared lease agreements ready to go. These third parties will often provide complimentary services to win the homeowner’s business. For example, some management companies will take photos of the home for free. They may also eat the cost of advertising the listing on various rental platforms. They will also save time by taking over the renter vetting process. However, such services don’t come for free. Homeowners will need to compare the pros and cons to see what they feel most comfortable with proceeding with.

Pros and cons for a tenant

There are plenty of benefits for those who rent directly from a homeowner. Individual homeowners may be more flexible towards negotiating lease terms such as rent increases, lease durations, or their policies towards pets, guests, etc. Having direct communication with the homeowner means that issues can be addressed directly rather than through a third-party. Better yet, renters may also save extra money given that the homeowner no longer has any overhead costs from hiring a third party. 

On the contrary, many of the benefits may also be drawbacks. The homeowner could be inexperienced, not as responsive, or structured as other landlords who have hired professionals to help with the process. Landlords who advertise their own listings, may still have costs associated with advertising the listing. These costs may be passed on to the tenant in the form of rent. 

Who writes up a FRBO lease?

The homeowner or landlord of the FRBO property is responsible for drafting and writing the lease agreement. FRBO lease agreements are just like other ones renters would get in other rental situations. The lease agreement will usually cover and clarify the following:

• Amount of rent due per month
• Rent due date and fees for late payments
• Fees such as security deposit amount, pet fees, parking, etc.
• How long the lease term will last
• Lease renewal or lease break terms
• What utilities are covered by the landlord as opposed to the renter
• Renter insurance requirements

Some other terms may include policies for guests, noise, smoking, usage of public amenities, etc. Lease agreements are meant to be legally binding documents so landlords will usually work with a professional to create their version of a lease agreement. It’s important for renters to fully review and understand the lease agreement before signing. 

How to find a FRBO near me

There are many options for renters to find FRBO properties. Renters can join and search in local Facebook groups or Reddit subreddit pages or search on popular rental platforms such as RentHop. Just use the filter “By Owner” to narrow the listing results to those posted directly by the owner or landlord.