You have probably heard millions of times that conducting comparative market analysis is a must in the world of real estate investing. You know what? It is actually true! Another thing you should know is that there are many ways of conducting comparative market analysis. For example, you can do it manually, use real estate investment tools or maybe you hire someone to do it for you. You can practice all those methods, they are proven! Yet, the main idea of this blog is to present you the best way of doing comparative market analysis. Curious? Just keep on reading
#1 Comparative Market Analysis in a Few Words
Comparative market analysis, also known as real estate market analysis, is used to explore a specific market and the rental properties in it. Knowing what comparative market analysis is and how to conduct it is considered to be real estate basics. So, if you are new in this business, make sure you take this information regarding comparative market analysis seriously. It might be extremely useful to read our real estate investing for beginners blogs and explore this research method in depth.
Conducting real estate market analysis is equally important for both the sellers and the buyers. On one hand, this analysis can help prevent the loss of potential profits when selling your rental properties. On the other hand, results of a real estate market analysis will prevent an investor from paying too much for something he/she can buy with less money. Moreover, choosing the right property is not the only criteria for success in this real estate investing business but the choice of real estate market is as well. Knowing which housing market to choose is crucial when planning on investing in rental properties. Curious to learn more about comparative market analysis? Make sure to read “Conducting Comparative Market Analysis: An Art or a Science?”
#2 The Steps You Take When Conducting Comparative Market Analysis
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Getting to Know the Market
When trying to select and purchase the best investment property, it is extremely important to get familiar with the local housing market first. This means that you should assess the market’s performance in terms of real estate investing. Moreover, you should explore the current state of the market- buyer’s market or seller’s market. Moreover, if you want to succeed in the sphere of real estate, you need to check what the best investment strategy for the specific area is. Last but not least, you have to explore the local rules and regulations which might apply to you. Needless to say, this is the only way you can prosper in the field.
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Neighborhood Analysis
Selecting a certain city or state is only half of the job. The real estate investor should conduct neighborhood analysis. The reason is simple, not every neighborhood is suitable for investing in rental properties, for example. Consequently, you should carefully analyze the neighborhood in which you would like to buy an investment property. Once again, in order to finance the best property, the real estate investor should take into consideration the close surroundings. Besides checking the performance of the neighborhood, make sure to review the facilities in the area as well as public services, such as transportation.
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Selecting Real Estate Comparables
In order to determine the market value of the investment property in question, you should select and investigate real estate comps. Real estate comparables are the properties that have similar features and are located near the property the investor has chosen. Moreover, it is important to state that these real estate comps should be recently sold properties in the specific real estate investing market. To be more specific, these real estate comps should be rental properties sold within the last 3-6 months. They should also be no further than a 3-mile radius from the property of interest in order to help you estimate the property value precisely.
Everything sounds so easy, doesn’t it? But the question of how to find real estate comps remains. You have two options that will guarantee you precise results. The first option is you hire a real estate agent. The second, you use real estate investment tools. Interested to broaden your knowledge about real estate comps? Make sure to read “Everything to Know About Real Estate Comps and How to Find Them.”
#3 No One Said You Cannot Take a Shortcut
Indeed, evaluating the market, conducting neighborhood analysis, and selecting real estate comps will take you weeks or maybe months. Because of this, the chance of missing great investment properties is high. So, what is that shortcut when conducting comparative market analysis? Well, you may hire a real estate agent who knows how to do real estate market analysis the most efficient way. Moreover, he/she most likely has a great network, so selecting the best investment property will not be hard. Further, due to experience, he/she will be able to estimate property value in no time. Besides that, when your investment strategy is flipping houses, finding properties under the market value will not be a tough thing.
You may skip hiring a real estate agent and save some bucks, as there is another way of speeding up the process. Using Mashvisor’s rental property calculator is the way. Calculating market value, selecting real estate comparables, doing neighborhood analysis and much more, is what this tool does. Moreover, it just takes seconds. The tool can help you in conducting both investment property analysis and comparative market analysis. Thus, do not waste your time and start looking for and analyzing the best investment properties in your city and neighborhood of choice right now. Click here to get started.
Are you ready to expand your real estate knowledge and learn about investment property analysis as well? Make sure to read “Investment Property Analysis: Real Estate Investing.”
Conclusion
It is true that there are many ways of conducting comparative market analysis. Yet, the best way to do real estate market analysis is to combine real estate investment tools and your own strengths and abilities. Consequently, you will be able to call yourself a successful real estate investor.