To succeed in real estate, the investor should start his/her career with buying an investment property. However, the real estate investor should not just buy a property, but rather the one that categorizes as one of the best real estate investments. Yet, what are the steps a beginner real estate investor should take? Which real estate investment tools should he/she use in order to select the best real estate investments? The answer is obvious! Comparative market analysis is the first step the most successful real estate investors take. Many experienced real estate investors conduct comparative market analysis before buying an investment property and succeed in real estate.
Here comes the question: “Is it a science where rational thinking is the answer to success in this field, or is it an art?” We have the answer and we are ready to share! Curious? Keep on reading!
#1 Why Is It Important to Conduct Comparative Market Analysis?
Many beginner real estate investors are eager to succeed in the real estate business. However, not every real estate investor is ready to go the extra mile and conduct a comparative market analysis precisely. So, why is it important for beginner real estate investors as well as experienced ones to conduct comparative market analysis?
Well, let’s explore the importance of comparative market analysis for both, the buyers as well as the sellers. Conducting comparative market analysis is crucial for buyers in order to avoid overpaying when buying an investment property. Moreover, with the results after conducting comparative market analysis, the real estate investor will be able to select as well as buy the best real estate investments. When mentioning sellers, conducting this analysis will help them in determining the asking price for the listed property. For a landlord, knowing how to conduct comparative market analysis is important, due to the fact that this analysis helps the experienced real estate investors as well as beginner ones in determining the amount of rent they should charge.
#2 How to Conduct Comparative Market Analysis
Let’s explore how to conduct comparative market analysis. This is the foundation of every transaction whether the real estate investor is selling or buying an investment property. Moreover, if you have planned on becoming one of the most successful real estate investors you should know how to conduct real estate market analysis. So, let’s go through the steps that the most successful real estate investors take when conducting comparative market analysis. If you are a beginner real estate investor who wants to learn more about comparative market analysis, then read “Comparative Market Analysis for Beginner Real Estate Investors.”
Step One: Investment Property Analysis
Whether the beginner real estate investor is selling or buying an investment property, he/she should conduct investment property analysis. Thanks to this analysis, the real estate investor is able to determine the investment property’s value, based on the property’s features. Several aspects should be carefully taken into account when the real estate investor is at this part of conducting comparative market analysis. For example, square footage of the property, location, number of bedrooms as well as number of bathrooms, the age of the investment property, etc. Interested to learn how to do investment property analysis? Make sure to read “Investment Property Analysis: Real Estate Investing.”
Step Two: Researching Real Estate Comparables
When the approximate value of the property in question is determined, it is the right time to move to the second step. The second step of performing comparative market analysis consists of identifying real estate comparables, also known as real estate comps. This is a crucial step in comparative market analysis. However, let’s first define what these real estate comps are and what role they play in comparative market analysis. Real estate comparables are investment properties which are similar to the one the investor is interested in and have been recently sold on the specific market. Basically, the similarities taken into account are the condition of the property, area, size of the property, etc. This helps in estimating the approximate market value of the property in question.
In order to have a good price estimation, a beginner real estate investor should carefully select at least three to five real estate comps in a maximum of three miles’ radius. Moreover, the neighborhood analysis should be performed in order to find similar properties. Curious to learn more about real estate comps? Make sure to read “Everything to Know About Real Estate Comps and How to Find Them.”
#3 Real Estate Investment Tools & Real Estate Appraiser
Finding the most suitable real estate comps is not as easy as it may look. It will take you a lot of time and effort until you are able to select the right properties. As we know, the real estate business is a brutally competitive sphere where time is everything. So how to find real estate comps in the most efficient way? There are two ways: you either hire a real estate appraiser or you use Mashvisor’s real estate investment tools. Such tools are the rental property calculator and heat map analysis tool. Let’s explore both options.
Hiring an Appraiser
Hiring an appraiser might be a great idea as that person is an authorized professional. Moreover his/her specialty is in estimating the value of investment properties. The real estate appraiser will be able to present you the needed numbers. Additionally, he/she will tell you how much your property is worth on the current real estate market. Neighborhood analysis, researching the real estate comparables, and much more is what the real estate appraiser does in order to provide you with the most accurate numbers. However, you can imagine that his/her services will not be for free. Consequently, if you are curious about how to conduct real estate market analysis without the help of the appraiser, you should use one of the real estate investment tools.
Mashvisor’s Investment Tools
Mashvisor has many real estate investment tools that help beginner real estate investors as well as experienced real estate investors in conducting comparative market analysis. For example, Mashvisor’s rental property calculator is a great tool. This tool will help the investor in finding the best real estate investments in the area of his/her choice. Moreover, this tool provides the investor with detailed neighborhood analysis, selects the optimal rental strategy, and calculates real estate metrics and much more. If you want to save your time, yet, select the best real estate comparables and learn how to conduct real estate market analysis, the rental property calculator will become your best friend. However, that is not all. Mashvisor’s heat map analysis tool is another great way used in selecting real estate comps without wasting your time.
Learn more about heatmap analysis: Finding Income Properties Using a Heatmap
To start looking for and analyzing the best investment properties in your city and neighborhood of choice with Mashvisor’s tools, click here.
#4 Is Conducting Comparative Market Analysis an Art or a Science?
It is hard to say if conducting a comparative market analysis is an art or science. More likely, it is a combination of both. The science part consists of the tools and methods used in this analysis. While the art part consists of the way the property is being evaluated and the innovative visions and ideas you have on the whole process.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.