It is only fair to admit that we owe most of our successes to technology, thus, making success in real estate investing no exception. For beginner real estate investors, how to buy investment property using technology? Here’s what we’ve got for you.
For this blog, we are going to talk about the must-have real estate investment tools. These tools, we know, have been the ultimate assistance for the most successful real estate investors ever since they were invented. Therefore, here are some of these tools:
Learn about other ways technology is affecting real estate: How Blockchain Technology in Real Estate Is Changing the Industry
How to buy investment property: The real estate investment calculator
Indeed, in real estate, there is what we call “must-have real estate investing tools” for real estate investors. The real estate investment calculator is one of these tools. Sure enough, there is no better way you can go about buying an investment property without using this tool. Well, you might say you could use spreadsheets. But, isn’t that just too much of an old-school thing? We’re talking about technology that will make real estate investing as easy as a walk in the park here!
So, why is the real estate investment calculator a must-have tool for real estate investors? Here are the reasons why:
The return on investment
The return on investment is perhaps one of the valuation measures that you do not want to miss. Why? Because basically, that is how you are going to be making money in real estate. After all, what’s the point of learning how to buy investment property with technology if you do not know this measure?
Note: Determining the return on investment is part of the investment property analysis, so you’ll often see both real estate terms used together.
What does the return on investment measure reveal?
First of all, this measure calculates two important metrics that a beginner real estate investor must get acquainted with: the cap rate and the cash on cash return. Both metrics calculate returns on certain amounts of money. For the cap rate, it calculates the return with respect to the overall required cash investment (the property price). On the other hand, the CoC return calculates it with respect to only the amount of money you have put from your own pocket. So, basically, they serve as an indicator of profitability in percentages.
However, these calculations also involve the potential rental income in addition to the potential rental expenses. In other terms, the real estate investment calculator serves as a rental property calculator by showing you the return on investment. Its one goal is to show you the numbers you would get in return for the numbers that are already involved, therefore, making your main goal to get as much positive cash flow as possible.
The real estate market analysis
The real estate market analysis is another type of analysis that can be performed with the real estate investment calculator. Simply, it is a study of the real estate market in the location you are looking into.
We already know that the fluctuations of the real estate market make it hard to predict what’s going to happen next, thus, making it impossible to buy an investment property without checking the performance of the market. Therefore, performing a neighborhood analysis is what you need to do. Well, not you but the investment property calculator! It analyzes appreciation rates as well as median prices of properties around a certain location. As a result, you get an insight into the best places to invest in real estate without having to drive around to check for yourself!
Use heatmap analysis for neighborhood analysis: Heatmap Analysis: The Secret to Successful Real Estate Investing
The comparative market analysis
The comparative market analysis (a part of the real estate market analysis) is what you need when 1) You are trying to figure out the investment property’s worth and 2) You want to know how much to expect as rental income.
What does the CMA have to do with how to buy investment property?
Simple. You know when you are looking for a hotel with affordable accommodation? You do not book the first one you lay your eyes on. Instead, you pick a hotel of interest and compare it to other hotels to check if the price they are offering is fair. So, basically, you are checking for the median price in that location. Anything above that price would be too expensive for you and anything beneath it would be too cheap and might not guarantee the quality. This is exactly how CMA works! You take your property, find similar properties in the same location and start the comparison process.
We call these “similar properties” real estate comps. They serve as a base for you to understand the pricing process in that certain location. Sure enough, your goal is to learn how to buy investment property at a competitive price. This means that you want a price that makes tenants want to rent YOUR property and not others’.
A real estate investment calculator can find real estate comps for you as your perform your investment property search.
Check out our calculator here.
How to buy investment property: Social media networks and real estate websites
The old days of marketing are long gone. You no longer have to rely on phone calls and maybe newspapers to look for properties for sale. Nowadays, there are social media networks that you could join and meet people sharing the same interests. Moreover, there are real estate websites that make for the best places to find investment properties for sale. So, get on board with the other successful real estate investors and learn how to buy investment property through online platforms!
Tip: Mashvisor is an outstanding place to start. Make sure to sign up to be able to find the best investment properties with this real estate website.
How to buy investment property: Mobile apps
There is nothing better than mobile phone apps to learn how to buy investment property. The fact that you can use them in absolutely any place with an internet connection is amazing. As a matter of fact, you can also pick investment properties of interest and show them to other real estate investors for advice.
There is no way you could learn how to buy investment property that is profitable without technology. As we have said before, the old-school methods are long gone. Your priority should be to save time and money on finding investment properties for sale.