It goes without mentioning that to make money in real estate investing requires much research and due diligence. And unless they have a real estate agent/real estate advisor doing the work for you, most investors take on the challenge full on and use websites like Mashvisor to conduct their own real estate market analysis for the highest ROI.
Diversifying your real estate investment portfolio and capitalizing on profitable real estate investments cannot be made on a whim or based on your gut instincts; guaranteeing returns is all about using data to make better predictions on your real estate investments down the line.
Related: How Data Makes Real Estate Investors Rich: A Mini Guide
What Is Predictive Analytics?
In the simplest terms, predictive analytics entails the use of larges sets of historical data to predict future events. It gives estimated future values regarding the profitability of a real estate investment and/or an overall market forecast.
Predictive analytics answers questions like “When should I buy a property?” and “When should I sell a property?”. It helps investors make sound decisions and mitigate their real estate risk in the future. Choosing the right real estate strategy respective to location, neighborhood, and the rental property itself is the recipe for success in real estate investing. To maximize returns, investors use predictive analytics for ROI metrics to measure the profitability of a real estate investment and how much it will be valued down the line. They use predictive analytics to capitalize on new real estate opportunities and beat their competition. Predictive analytics gives investors forethought to win big in real estate investing.
3 Benefits of Predictive Analytics
1. Identify real estate opportunities and trends
Such analytics assess future home values and potential risks to aid real estate investors in their decision making process. Predictive analytics uses historical data to guide investors in choosing the right location for diversifying their real estate business.
2. Capitalize on the best profitable real estate properties
Using Mashvisor’s heatmap tool and the rental property calculator, investors can pinpoint which rental properties will reap positive cash flow return and real estate appreciation, given the location and the neighborhood. You can select any location/city in the US and assess the overall ROI in a specific neighborhood for a specific rental property.
3. Mitigate vacancy risk
Predictive analytics provides numbers on occupancy rates and the level of vacancy risk respective to any neighborhood. Without the right tenants, investors won’t earn a steady flow of passive income, and this in turn will drastically hinder their profit potential and the overall success of their real estate business. Investors will also know what kind of tenants to expect from the tenant insights, indicating the average household income and household size.
Predictive Analytics in Real Estate Investing
The good news is there is no manual work involved and thanks to the internet, real estate investors use online platforms like Mashvisor to help them deduce which real estate investments will reap the biggest financial rewards in 15 minutes or less.
Related: 6 Must-Have Real Estate Investment Tools
The Use of Predictive Analytics for Big Real Estate Opportunities
Without predictive analytics, real estate investors cannot guarantee positive cash flow properties and mitigate real estate risk on their investments. Using Mashvisor, real estate investors can pinpoint the right rental property to grow their returns and reap big bucks. The website provides real estate analytics and predictive analytics for Airbnb and traditional real estate properties. It measures the return on investment via key metrics:
- Airbnb occupancy rate
- Airbnb rental income
- Traditional rental income
- Airbnb cap rate
- Traditional cap rate
- Airbnb cash on cash return
- Traditional cash on cash return
Real estate comps gives investors a good indicator of how much to sell, where to buy, and when. This comparative analysis shows them how much revenue they will make based on ‘comparable’ or similar real estate properties in the location of choice.
How to Use Mashvisor for the Biggest ROI
1. Specify a location
You can start with selecting a location or a neighborhood you have in mind to see how many property listings are in the given location. When not sure which neighborhood to invest in, investors look at the Mashmeter score and the heatmap tool to decipher which real estate properties are worth the investments down the line.
2. Pick a neighborhood and view the listings
Once the neighborhood is selected, you will see all the listings and an immediate comparison between the traditional and Airbnb rental strategy by looking at the cash on cash return and the cap rate. You can also customize your property search further by using the rental property calculator by changing the down payment, the loan type, the interest rate, etc.
3. View a rental report
Mashvisor provides real estate comps and comparative analysis for traditional and Airbnb properties across the country. Real estate investors and real estate agents get access to property listings, reviews, descriptions, features, prices, occupancy rates, and much, much more. This comparative data allows you to hone in on rental properties which perform well and reap big profits respective to the location.
4. Interactive investment property analysis
Real estate investors also get a report which provides cost projections, based on filters and key preferences/inputs specified to the investment property calculator. You can play around with the costs to get a better idea of the cash flow projections. The analysis takes into account startup costs, monthly costs, and turnover costs to get revenue assumptions.
Once you have entered your cost assumptions, a month by month breakdown of your expenses will be generated automatically. This eliminates the need to create spreadsheets and helps prepare your monthly budget as well as estimating the timeline of the return on the investment.
5. The optimal rental property
Finally, you will arrive at the optimal rental strategy aligned with your goals and overall costs and expenses. The property type, number of bedrooms, and rental strategy appear as a summary as your best advised real estate investment strategy.
Conclusion
Predictive analytics is crucial for big real estate success. With the use of historical data to foresee trends and opportunities, real estate investors are able to make better decisions and have greater control over the outcome of their real estate investments.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.