As a real estate investor or enthusiast, have you ever wondered if there is a way to predict if your investment will be successful?
Well fortunately, that is a possibility for any potential investor in the U.S. Buying an investment property requires so much research and quantitative analysis, which in the past, has required cross referencing a large scope of resources, such as brokers, city reports, and investors. Now this different type of data can be aggregated and properties can be analyzed much more quickly.
Mashvisor has provided a service that is able to answer the questions of an investor, in a quicker, more simplified manner. The service provides predictive analytics that show the expected performance levels of an investment property based on historical data available for each city.
This is done using an investment property calculator, which basically calculates the costs and returns of the investment property selected, using analytics of the market and its data. Mashvisor’s interactive page allows you to crunch the numbers yourself, in terms of mortgage payments, expenses, and even rental profits.
What Does Mashvisor’s Interactive Property Calculator Do?
The interactive property calculator gives the user detailed insight about the neighborhood, investment property, costs and a notes section for the user.
Related: The Use of Predictive Analytics in Real Estate Investing
With Mashvisor, you can search the city you want to invest in and that will lead you to the city map with an overview of each neighborhood. Mashvisor then provides you with the most relevant numbers of each neighborhood in that city to give you a general idea about checking that neighborhood or not. The analysis of each neighborhood includes the average rental income, median property price, occupancy rate, average capitalization rate, and average cash on cash return. These crucial figures will also be available in two different options, the average of Airbnb investment strategies compared to traditional strategy ones.
The neighborhood insight option allows you to get more insight about the optimal property type, optimal bedroom number and the optimal rental strategy to use (Airbnb vs. traditional). Mashvisor also provides investment property buyers with the Mashmeter, which works in percentage form to give each neighborhood a score that can be comparable to other neighborhoods in the same or different city.
To make this more practical, lets consider an investor searching Tampa, Florida. The search brings up the neighborhoods and we select Historic Ybor. The average price of properties in this neighborhood is $160,000 and let’s say we’re going to pay cash for this property. The cash on cash return is 6.47% for traditional rentals and 16.80% for Airbnb rentals; and shows occupancy rates and rental income on average. Selecting one neighborhood brings up three options to look at, rent analysis, comparisons and insights. The rent analysis gives the user an indication of rental prices for each property in that neighborhood for every month. Comparisons show all listed investment properties and give a detailed description of each one, which include price, bedrooms, and square feet. Insights in the example of Historic Ybor will show us the following data.
- Optimal Property Type: Condominium
- Optimal Bedrooms: 2 Bedrooms
- Optimal Strategy: Airbnb
Having all these details for one particular neighborhood is enough to get an idea of what kind of property to buy in this neighborhood and what strategy to use, in order to get high returns.
Related: Tampa: Hot Weather, Hot Real Estate for 2017
Investment Property Analysis
Selecting the neighborhood is the most basic step using Mashvisor’s interactive property calculator. The neighborhood map will show you a list of properties that are listed. Each investment property will have a selling price, cash on cash return, cap rate, size of property and address.
Once you select a property, it will give as potential buyer an interactive property calculator that will allow you to predict rental income, monthly expenses, cash flow, cash on cash return, cap rate and occupancy rate. Those numbers also exist in two options, Airbnb and traditional rentals.
Mashvisor provides you with the estimated costs of expenses for that particular property based on the neighborhood’s average expenses. All expenses can be edited. The expenses include property taxes, insurance rates and mortgage rates for that particular area.
One more feature on the interactive calculator that is most useful for potential buyers with mortgages is the financing option. It allows the investor to edit the down payment, loan amount and loan type for that property. Choosing cash or mortgage payments recalculates the annual calculations, as it takes into account interest payments for every year.
For explanatory purposes, let us consider 113 W Wilder, South Seminole Heights in Tampa, Florida. This single-family residential property is considered a lucrative property because of its price and potential returns. Let’s say we’re going to pay for the property with cash. The property has a price of $170,000; has three bedrooms and two bathrooms; and has a net profit of $2,058 per month as an Airbnb rental. If we take a closer look at the cap rate and cash on cash return for either Airbnb or traditional rentals, we find them to be above-average. For Airbnb, the cap rate is 19.48% and cash on cash return is 14.53%. However, in traditional rentals, the cap rate is 8.89% and the cash on cash return is 4.57%. From those analytics alone, you can understand that Airbnb is a more profitable option for this property. Listing it on Airbnb will give the investor a full return on their investment in 7-8 years while a traditional listing would require more than 10 years to payback the investment.
The data is capable of providing you, as a potential investment property buyer, with all the details required making a plan for the present and future of your investment. Using Mashvisor’s property analysis feature will help you budget your finances and understand the potential of every single property. The new age on investment property purchases has arrived.