Investing in real estate comes with a lot of questions. Who, what, where, why, when, and how- they all apply here. When investing in single family homes, you’re going to have a lot of listings to choose from. Ultimately, the investment property you choose will be based on many factors. Return on investment is a big factor that needs to be studied for any real estate investment. A key metric that gives property investors one projection of return is the capitalization rate (cap rate), which should be included in any investment analysis. Seeing as it’s such an important metric, all real estate investors should have access to cap rate data. But where can you find cap rates for single family homes?
Mashvisor’s Cap Rate Data for Single Family Homes
Finding cap rates for single family homes is actually easier than ever with Mashvisor’s platform. If you haven’t used digital tools for real estate investment analysis before, you might still be under the impression that calculating cap rate is something that’ll take hours of manual work. But it really isn’t. The easiest way to find cap rates is by using our search tool. By searching for single family homes for sale with our platform, you’ll have access to key data for each investment property, and that includes cap rate data.
Here’s how you can find cap rates for single family homes with Mashvisor.
Cap Rates for Investment Properties
After entering the location you want to conduct your search for single family rentals in, a list of investment properties for sale will appear. There’s also an interactive map feature that allows you to zoom in and out of a location for different search results. For each property listed under our ‘investment properties’ tab is a projected rate of return. Selecting a listing, or hovering over a certain investment property on the map will give users data related to the estimated cash on cash return and the cap rate of the property.
Mashvisor provides two sets of return projections based on how the investment property will be rented out. So you’ll find cap rates for a traditional rental strategy and for an Airbnb rental strategy. This allows you to get an initial analysis of which strategy is more suitable for your single family investment property and location of choice.
Did you know that Atlanta single family homes have some of the highest return on investment in terms of cap rate? Read our Atlanta Real Estate Market Report for more information!
Going Back to the Basics: How Is Cap Rate Calculated?
Although Mashvisor’s data makes it unnecessary for real estate investors to study the formulas and calculations behind cap rates for single family homes, it’s still good to have a basic understanding of the other factors at play here. What is the cap rate?
The cap rate is a means of evaluating how profitable or valuable a property would be as a real estate investment based on how much income it would generate. This makes it a key metric to be considered when investing in income-producing assets. The cap rate is found by dividing the net operating income (NOI) by the purchase price/market value of the investment property. The NOI is found by taking gross rental income and deducting all expenses from it (except the mortgage).
How Mashvisor Finds Cap Rates for Single Family Homes
Mashvisor collects its data from reliable sources. ListHub allows us to gather data from hundreds of MLSs nationwide which we also verify using other sources such as RedFin, Trulia, and RentJungle. MLS listings are updated daily, while our return projections and other key data are updated every month. We use historical, predictive, and comparative data to give you the most reliable and accurate projections for each investment property. We don’t just provide cap rates for single family homes. Our analysis includes a lot more data for a lot more property types. These include apartments, condos, townhouses, and more.
You’re buying a single family home for investment and you’re planning on holding it for a long time. In this case, you can either set it up as a traditional long term rental or as an Airbnb short term rental. Because each rental strategy generates a different level of rental income, each strategy projects a different level of return. For that reason, cap rates for single family homes will differ based on how you’re renting out the property. And as you already know, Mashvisor provides its users with readily available data for both strategies. We collect our short term rental data directly from their online platforms like Airbnb and VRBO.
Use Our Cap Rate Calculator Yourself
Wondering how to find cap rates for single family homes yourself? Although we provide you with an investment and return analysis for each property, you can modify these projections by entering your own numbers. You have the option to change the dollar amount of rental income used in the analysis, as well as the dollar amount of expenses. If you have a custom expense that isn’t already included in our analysis sheet, you can add it and see how it affects the cash flow and ultimately the cap rate for this single family home. If you check out the tool yourself, you will find that there are a lot more interesting features (like rental comps and the ability to calculate cash on cash return based on your mortgage rate and down payment).