Are you looking to invest in real estate? Buying rental property comes with a lot of benefits including passive income, leverage, value appreciation, and tax benefits. However, many beginner investors end up losing money because of making wrong investment decisions. So, how do you ensure that you purchase a profitable investment property? The answer is: By conducting a thorough analysis using a reliable investment property calculator.
While there are numerous calculators available, the best rental property calculator that’s currently on the market is Mashvisor’s. Read on to learn why you need to use this real estate investment tool before buying an investment property in the US real estate market this year.
Mashvisor’s Investment Property Calculator
Mashvisor’s investment property calculator is a digital tool that can help you find lucrative investment properties for sale in the US residential market. To have a profitable real estate investment, you have to choose the right location, buy the right investment property, and select the optimal rental strategy. Mashvisor’s calculator helps you achieve all these.
It does so by enabling you to find and analyze both neighborhoods and investment properties. All you have to do is to enter some basic information according to your investment criteria, and the calculator will do the rest of the work. The tool is quick and accurate as it uses reliable traditional and predictive analytics. It will save you a lot of time and effort in analyzing potential real estate deals.
Let’s take an in-depth look at how Mashvisor’s investment property calculator can help you conduct neighborhood analysis and investment property analysis.
1. Neighborhood Analysis
Location is the most important factor in real estate investing as it is the largest determinant of your return on investment. Therefore, you need to conduct a thorough real estate market analysis to locate the best-performing markets.
Choosing the city to invest in is quite easy as you can find city data online such as on Mashvisor’s real estate blog. However, this is only half of your market research. You have to narrow down your property search to a particular neighborhood in your city of choice. Similar income properties in different areas within the city can have very different prices and generate strikingly different returns. Mashvisor’s investment property calculator helps you find the best neighborhood for your budget and investment strategy easily and quickly. With just a few clicks of the mouse, you can conduct a complete neighborhood analysis.
One easy and efficient way to begin your neighborhood analysis is to use Mashvisor’s real estate heatmap. This tool uses different color codes to show the performance of neighborhoods in your market of choice based on metrics such as price, rental income (Airbnb and traditional), cash on cash return (Airbnb and traditional), and Airbnb occupancy rate.
After identifying top-performing neighborhoods that fit your budget, you can do a more in-depth analysis of those neighborhoods using Mashvisor’s investment property calculator. The calculator will provide the following neighborhood-level real estate data and analytics on the Neighborhood Analytics Page:
- Median price
- Average price per square foot
- Average Airbnb and traditional rental income
- Average Airbnb and traditional cash on cash return
- Average Airbnb occupancy rate
- Optimal rental strategy
- Optimal number of bedrooms
- Optimal property type
- Number of traditional and Airbnb properties for sale
- Walk Score
- Mashmeter Score
- Real estate comps
Mashvisor also allows you to download a full report for the neighborhood you are analyzing. The report includes all the property listings in the neighborhood as well as their stats in an Excel format to help you compare them easily. Moreover, you can share the file with your real estate agent or business partner to get a second opinion before moving forward with the property search.
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2. Investment Property Analysis
Once you have decided which neighborhood to invest in, the next step is to find the most profitable income property for sale you can buy. This will require that you analyze multiple property listings that fall within your budget and fit your investment goals to determine the best one for your particular case. Since you already have a good idea about the optimal property type, number of bedrooms, and rental strategy from your neighborhood analysis, you need to focus your search on these properties.
A quick and efficient way to do your investment property search today is to use Mashvisor’s Property Finder. The tool will scour your target market and provide you with a list of properties that match your exact search criteria and have a high return on investment potential.
You now need to conduct a detailed analysis of these properties. This is where Mashvisor’s investment property calculator comes in. For each property you analyze, you’ll get a variety of useful investment property information including:
Mashvisor’s investment property calculator provides investors with accurate estimates of one-time startup costs and recurring rental property expenses. Monthly expenses estimates are useful in determining the potential cash flow, while the start-up costs estimates will help you know your up-front investment.
The costs estimates include:
One-Time Startup Costs
- Closing costs
- Home inspection
- Furniture and appliances
- Home repair
- Property insurance
- Property tax
- Property management expenses
- HOA dues
- Rental income tax
The investment property calculator can also be used as a rental income calculator as it provides rental income estimates. To estimate rental income on your own, you’ll need to locate rental comps in the area, a process that is time-intensive. Mashvisor’s calculator saves you time as it provides readily calculated estimates for Airbnb and traditional rental income.
With estimates for rental income and rental expenses, you can calculate the potential cash flow. However, you don’t have to as Mashvisor’s cash flow calculator will provide you with readily calculated cash flow data. It is recommended that you only invest in positive cash flow properties, especially if you are still a beginner.
Return on Investment
The main reason real estate investors conduct a rental property analysis is to determine the profitability potential. This is mainly indicated by return on investment. The two key ROI metrics are cap rate and cash on cash return. These calculations can be very difficult to do manually, especially when analyzing multiple rental property investments. However, with Mashvisor’s cash on cash return calculator and cap rate calculator, you can access readily available estimates of these ROI numbers.
Our return on investment calculator also has an inbuilt investment property mortgage calculator. This interactive feature allows you to calculate your potential cash flow and cash on cash return based on the mortgage information you put in. This includes property price, loan amount, mortgage type, loan term, down payment, and interest rate.
Occupancy rate is a measure of rental demand, which will have a huge impact on your rental income and return on investment. However, estimating occupancy rate is very hard as it depends on many factors such as the desirability of the location, property type, current market conditions, your marketing skills, etc. Mashvisor’s investment property calculator provides accurate occupancy rate estimates for you based on the performance of real estate comps.
Optimal Rental Strategy
For each of the key metrics the calculator provides, you’ll get values for both Airbnb and traditional rental strategies. This will help you to easily compare and decide the optimal rental strategy for this particular property.
Real Estate Comps
Real estate investors need to examine recent sales of similar properties in the area (real estate comps) to determine if the purchase price is reasonable to avoid overpaying. When determining their rent estimate, investors also need to look at rates charged by comparable rental listings in the area. Finding real estate comps as well as rental comps is made easier with Mashvisor’s investment property calculator. It will give you a list of comps and more information about them to help you do your own comparative analysis.
The Bottom Line
To have a successful real estate investment, you need to find the right property, in the right profitable location. This requires in-depth real estate market analysis and investment property analysis. With Mashvisor’s investment property calculator, you’ll be able to pinpoint the best neighborhoods and the best investment properties for sale in the US housing market even if you are a beginner investor.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here