How to find investment properties? That is one of the biggest questions in real estate investing. Even though you might have broad knowledge and vast experience in the field of real estate investing, choosing an income property is a challenge every single time. Many property investors prefer to rely on the must-have real estate investment tools in order to select the best properties and start or keep on making money in real estate. One of these must-have real estate investment tools is the heatmap analysis. This type of analysis has become very popular among real estate investors wondering how to find investment properties with high rental income. Well, if you are one of these property investors, you’ve come to the right place. In this blog, we will reveal how to find investment properties with the help of heatmap analysis.
#1 What Is Heatmap Analysis?
Let’s start off by explaining what a heatmap actually is. Even if you have not conducted this kind of analysis in the context of real estate, you have probably seen and experienced it elsewhere. For instance, heatmap analysis is used to present the most popular/interesting tourist destinations, demographic factors as well as other everyday matters. In terms of real estate, such analysis may present the best cities to invest in, cheapest properties, and so on and so forth. So, what is a heatmap after all?
Well, a heatmap, as the title suggests, is a visual map. On this map, data appears on the basis of the given criteria. For instance, the map might present balloons with ratings of the safest neighborhoods in a city. Such maps are extremely useful as they make it easy for real estate investors to explore a number of real estate metrics in the matter of a few clicks. Imagine how effortless it is to measure and compare return on investment, cap rate or cash on cash return for different states/cities or locations within a city. Additionally, you can choose income properties on the basis of the property price. Last but not least, the heatmap can help you in defining the optimal rental strategy for your investment property. Needless to say, the correctly chosen rental strategy is a huge step in the direction of making money in real estate.
#2 Mashvisor’s Heatmap Analysis
Mashvisor’s heatmap analysis is one of the leading ones in the market of real estate and, certainly, there is a reason for that. The tool has all the specifications described above. This means that it can present you with all the data you need on the basis of the criteria you put in the system. The map will quickly visualize all the information you need.
Mashvisor’s tool has some advantages to make finding investment properties even faster, easier, and more pleasant. With the use of color symbols to present the data in a quickly understandable manner, you can compare many rental properties and find the best performance numbers across all of them. The tool uses the green color to emphasize a high performance score, orange for moderate performance ratings, and red for low ones. This color scheme can be used for each and every criteria you wish.
Additionally, Mashvisor’s heatmap analysis has the function of dividing the data according to the rental strategy. Thus, it can present data for short term rentals such as Airbnb cash on cash return, Airbnb occupancy rate, and Airbnb rental income. On the other hand, the tool can also show traditional rental income and traditional cash on cash return. That comes in handy when searching for the best investments and their optimal rental strategy.
All of this is amazing, but how to find investment properties using the heatmap?
#3 How to Find Investment Properties Using the Heatmap
Learning how to find investment properties is definitely not easy. Yet, when it comes to a heatmap analysis, there are just a few simple steps to follow.
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How to Find Investment Properties Using the Heatmap: Real Estate Market Analysis
Instead of wondering how to find investment properties, start by conducting real estate market analysis. This is the very first step you should engage in. It consists of analyzing and comparing different markets within the United States. By exploring the performance values of the different areas, you can easily make a decision which market/city will be an asset to include in your real estate investment portfolio. You can, for instance, measure real estate metrics, such as return on investment, cash on cash return and cap rate. Do not forget to also check the median property price. This way, you can better assess whether or not an investment in a certain location is worth it. Also, you can find the best region to invest in while also being consistent with your business plan.
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How to Find Investment Properties Using the Heatmap: Neighborhood Analysis
The next step is, of course, performing neighborhood analysis. This step is quite similar to the previous one. However, besides relying on the numbers provided by the heatmap, it is also advisable to make qualitative research. This includes checking the available facilities in the area, crime rates, connectedness, etc. Keep in mind to check the traditional and Airbnb occupancy rate in each area.
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How to Find Investment Properties Using the Heatmap: Choosing and Buying an Investment Property
One of the crucial steps is, of course, finding and buying an investment property. Here it is advisable to use the feature Mashvisor offers and search for rental properties based on the optimal rental strategy. For Airbnb properties, make sure that the property has a high Airbnb cash on cash return. Additionally, the short term rental should have the potential of generating high Airbnb rental income. The same is valid for long term rentals- simply review the traditional cash on cash return and potential traditional rental income.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.