It’s true that to get started in real estate, you will need a list of different things. However, there is one essential that you need if you want to get started successfully: housing market data.
What exactly is housing market data? Why is it the one thing you need for getting started in real estate? Where can you get access to real estate market data? Keep reading to learn the answers to these questions!
What Is Housing Market Data?
Being a first-time real estate investor is not a walk in the park. The proper tools are needed for such an investor to make money in real estate. Fortunately, housing market data helps you do just that. As the name suggests, housing market data is real estate data of a certain rental market. It can include housing inventory levels, price trends, occupancy and vacancy rates of different property types, average rental rates, average days on market, the price to rent ratio, and so much more.
Related: How Data Makes Real Estate Investors Rich: A Mini Guide
The market in question can vary, of course. The data can be as widespread as US housing market data, city real estate data, or as specific as neighborhood data.
For the longest time, housing market data was tabulated using spreadsheets. As of late, software that employs a combination of traditional and predictive analytics is used for the modern collection of housing market data.
How Can Housing Market Data Help Real Estate Investors?
What is the purpose of housing market data? To sum it up in one sentence, real estate data is the core of everything related to finding where to invest in real estate and what investment property to purchase. These things include:
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Finding the Right Investment Location
What are the three most important things in real estate investing? You already know the answer: location, location, and location. It’s easy to see why searching for the ideal investment location is the most important step in investing in real estate. Manually collecting the housing market data of the best cities to invest in real estate is insanely tedious. By using real estate data software, however, beginner real estate investors can easily conduct a housing market analysis. After conducting the analysis, investors can perform a neighborhood analysis for a further breakdown of the investment location.
Related: What Are the Best Tools for Real Estate Market Analysis?
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Choosing Income Properties
Once a real estate investor has settled on the investment location, it’s time to learn how to find an investment property using housing market data. Just like searching for a city and neighborhood, housing market data comes to the rescue. By using real estate data, investors are able to learn about various investment properties. Features such as property price, square footage, number of bedrooms and bathrooms, and property type, are collected using real estate data. Some of the best real estate investing tools that use this data (one of these tools will be mentioned later) can adjust searches based on these features and many others.
What’s more, you can compare individual investment properties to the general market data in order to see if the property you’re eyeing is over or underpriced. In this way, you can eliminate listings and narrow down your choices quickly.
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Estimating Rental Income and Rental Expenses
The main reason investors purchase income properties is to make a profit. In other words, the core of real estate investing is generating rental income. All investors would love to know how much income they would generate with rental properties. While market data cannot tell investors how much they will make exactly, it can do the next best thing. Of course, we are referring to how real estate market data predicts the amount of rental income for an investment property. The same applies to rental expenses. The top tools that use housing market data take the market averages and more to provide you with reliable estimates of rental income and expenses for a specific property.
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Calculating Return on Investment
The most accurate way to express the profitability of an income property is through return on investment, or ROI. Housing market data is used by investing tools to compute different forms of ROI, such as cash flow, cash on cash return, and cap rate based on market trends.
Where Can You Obtain Housing Market Data?
So, where can you get access to housing market data and the wonderful tools that make use of it? Right here, with Mashvisor and its investment property calculator! Mashvisor’s calculator and its data perform all the previously mentioned functions, such as analyzing and computing neighborhood and rental property data. However, our calculator can offer you so much more. Mashvisor’s calculator uses data in three creative and informative ways:
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Determining the Best Rental Strategy for Income Property
One of the most important decisions when renting out an income property is choosing the right rental strategy. In some areas, traditional, long-term rentals are a safer investment. In areas with supportive short-term rental regulations and tourist attractions, Airbnb vacation homes are the way to go. Mashvisor’s investment property calculator uses market data to tell investors which strategy works better for a given investment property.
Mashvisor’s Investment Property Calculator
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Calculating Airbnb Occupancy Rates
If Mashvisor’s calculator does determine that Airbnb is the ideal strategy for a property, then an investor must learn about the Airbnb occupancy rates. This is a vital piece of information that is provided by the calculator. Mashvisor’s calculator provides Airbnb occupancy rate data for states and cities (this data can be found on our blog), neighborhoods, and individual investment properties for sale.
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Providing Investment Valuation Score
Being able to comprehensively evaluate an investment is hard to do without real estate data. In the past, the only way to successfully do this was with time and experience. Luckily, Mashvisor grades every investment using both qualitative and quantitative housing market data by city. The score is a percentage. The higher it is, the better the potential real estate investment.
All in all, housing market data is the sole source of information that a first-timer real estate investor needs to flourish with investment properties. To start using housing market data in 2019, click here to begin your 14-day FREE trial with Mashvisor’s investment property calculator!
Related: Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors