All real estate investors know that the very first step you need to take in order to make your investment is to find an investment property.
While the process of finding an investment property might not seem like a challenge, finding THE RIGHT investment property based on quantitative and qualitative data and comparing different properties in order to decide on the best investment property is a lengthy process that requires a lot of effort and skills.
This does not necessarily have to be the case, however, as you will learn after reading this post. An online platform, Mashvisor, exists, that can help you throughout the entire process of finding an investment property, analyzing it, and making the best real estate investment.
Without further ado, let’s get to it…
How to Find an Investment Property?
In order to find an investment property, first, you will need to decide on an area or a neighborhood (location) to invest in.
Naturally, the area of your choice will have several investment opportunities that you will need to consider. After deciding on an area, you will have to drive around and visit the available properties for sale in order to get an idea of their nature and characteristics. You will also have to research the properties for sale and gather data related to them and the location that you’re investing in. In order to acquire the needed data, you will have to contact the property owners, property management companies, and several other parties that can provide you with the data needed in order to analyze the property.
The main aspects of an investment property that you will want to look at include the cap rate, the cash on cash return, and the property price.
In addition to acquiring the information, you will also need to analyze and compare properties based on your results. This includes getting the average values of these metrics for the desired neighborhood in order to determine the value of the investment property that you are interested in.
Usually, you will want to pick 3-5 investment properties in the area that have above average values indicating that they would make good investment opportunities before deciding on a single investment property to invest in.
Alternatively, you can use…
Using Mashvisor to find an investment property will cut short the time required to make your investment. Mashvisor’s platform includes a number of different real estate investing tools and functions that can help you find the investment property that you’re interested in with much less time and effort and using nothing but a smartphone or a computer.
Mashvisor’s property finder tool allows you to choose a neighborhood and start analyzing investment properties in that neighborhood immediately. The tool utilizes a map function to help you pinpoint the locations of properties and a heat map function that assesses the properties in the area based on your value choice.
For example, you can set the heat map to indicate the value of investment properties in an area based on the median property price, giving you a “hot” and “cold” visual indicator to help you mark your choices.
Additionally, the property finder also provides you with information about the investment property, including its price, cap rate, cash on cash return, and other important values, and it allows you to filter properties based on the type of investment property such as condos, single-family homes, multi-family homes, studios, apartment buildings, etc.
Using Mashvisor to find rental properties can be extremely useful. This is because Mashvisor provides you with data on both traditional and Airbnb rental properties, allowing you to determine which type of rental strategy best suits your investment agenda.
The rental property finder also extracts data from Airbnb to indicate the expected occupancy rate of the investment property as well as the average costs and expenses related to that property, which can be used to effectively calculate the expected cash flow of the investment property that you are interested in.
How to Analyze Your Investment Property?
Normally, the process of analyzing an investment property is a long and daunting one that scares many real estate investors away. Investment property analysis is a very crucial part of any real estate investment, as it allows the investor to determine the value of an investment property and its profitability.
Traditionally, in order to analyze an investment property, you will need to gather as much data about the property as possible, and using a spreadsheet and a calculator you will need to start calculating each property’s values before you can compare them.
The most common values that you will need to calculate in order to determine a property’s value are:
This is the main metric used to determine the value of an investment property. Cash flow refers directly to the profitability of an investment property: positive cash flow means that the investment property is earning money, while negative cash flow means that it’s causing you to lose money.
Cash Flow = NOI – (Expenses + Mortgage Payments)
This value indicates the investment property’s profitability in relation to the amount of money invested in it, or the amount of time needed for the property to generate enough profit to cover the amount of money initially invested in it.
CoC = NOI / Money Invested (not including mortgage)
In order to calculate any values related to your investment, you will need to determine the expenses that are expected for your investment property. These expenses include taxes, property management, vacancy rate (for rental properties), water, electricity, sewage, etc. In order to get an estimate on these expenses, you will have to do a lot of research and visits to acquire data related to each expense.
The Mashvisor investment property calculator makes the daunting process of investment property analysis more seamless than ever before. Instead of spending hours, days, or even months on research and calculations, the Mashvisor rental property calculator allows you to acquire the values of each property with a single click of your mouse.
You can either select a property that you’re interested in from the platform, and it provides you with all the information and values related to that property, or you can set the values you want for the metrics of your choice and it will give you all the properties in the selected area that your search criteria apply to. No more countless hours of daunting research using a spreadsheet and a calculator; the Mashvisor property calculator has it all.
Additionally, the Mashvisor investment property calculator allows real estate investors to set their own values or change the pre-set values to further personalize and customize their analytics, such as the option to set the mortgage value or any unique expenses, and the calculator will do the rest to deliver an accurate report related to the property, a number of properties, or an area based on quantitative and qualitative analytics and property comps, providing you with all the data that you need to show your agent or to base your investment decision on.