Real estate analysis software is a tool that can save you tremendous time and brain energy when investing in real estate.
Whether you’re a beginner real estate investor or an investor with years of experience in the market, real estate analysis software is a tool that is worth checking out. It can offer you significant value and help you invest in real estate in the least amount of time and at a higher efficiency.
But what is real estate analysis software, and how can it do all that for you when investing in real estate?
In this article, I will be talking about the most common features that you can find or should look for in real estate investment analysis software, and how these features can save you time and energy and make your life that much easier as a real estate investor.
Real Estate Analysis Software: What Is It?
Real estate analysis software is a tool that can analyze a real estate market, such as a city or a neighborhood, as well as the investment properties within that market in order to help you make wiser investment decisions and save you time on researching the markets and analyzing each property individually to learn about its investment potential.
There are numerous types of real estate analysis software out there. Depending on the type of investment you want to make, the real estate analysis tool that you want to use should be specialized in the type of investment strategy that you’re aiming for.
Mashvisor, for example, is a real estate analysis software that specializes in both long-term and short-term rental properties. Although the platform includes other features that can be used for other types of investment strategies as well, for the sake of simplicity, I will be using Mashvisor’s platform and its focus on rental properties in particular as an example when explaining the software, its features, and what it can do for you when investing in real estate.
So, using Mashvisor as an example, this real estate analysis software will provide you with tools and features that can help you in the different processes related to investing in rental properties. Although it can help you search for properties, analyze them, and compare them, let’s focus on the analysis part of the platform.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Real Estate Analysis Software: Analyzing Rental Properties
When it comes to analyzing a rental property, what are the details and info that you need to have about each property, and how can you use them for analyzing the property and determining its viability or potential for investment?
Rental properties are generally considered easier to analyze because it’s easy to understand the analytics and what they mean for your investment.
There are 3 major elements that you will need to have when analyzing any rental property:
- The amount of cash/mortgage needed to invest in the property
- The amount of money that the property can generate
- The amount of recurring expenses that will be spent to operate the property
Knowing this, it’s easy to make sense of these values and see how you can use them to analyze the investment property. Of course, the results that you will want to have are the metrics that are used for calculating the return on investment of the property.
Rental properties have 3 main metrics that are used in their ROI analysis:
- Cash Flow
- Cash on Cash Return
- Cap Rate
Each of these metrics is unique in the info that it gives you about the property that you want to invest in.
The cash flow, for example, tells you the exact amount of money that the property will generate each month or year after deducting the expenses. Therefore, the cash flow of a rental property can be considered as the amount of actual profits that the rental property will generate.
The cash on cash return and the cap rate, on the other hand, are similar to one another. The difference between the two metrics is that while the cash on cash return only accounts for the actual amount of cash invested in the property, leaving out any borrowed money from its calculations, the cap rate does not account for the method of financing and will assume that the full price of the property was paid in cash.
Real Estate Analysis Software: How Is It Used?
Again, I will use Mashvisor as an example for simplicity and familiarity.
When using Mashvisor, and by visiting any investment property’s analysis page, you will find that most of the values mentioned above are pre-calculated and provided to you in their default values.
By using rental comps, Mashvisor provides the user with each property’s rental income, which is the amount of rent that the property is expected to generate on a monthly and yearly basis after accounting for its occupancy rate.
When it comes to the operational expenses and running costs of the investment property, Mashvisor will also provide the user with default values based on the area’s averages for expenses such as maintenance costs, amenities, taxes, and property management costs. These values are all customizable and can be modified based on your own research if you believe they can be further improved to give you more accurate results.
Finally, there’s a special section that is connected to the property analysis calculator that you can use to determine the financing method that you want to use, which can be switched between all cash or mortgage. Using this tool, you can set the amount of mortgage that you want to use for purchasing the property, its interest rate, and its payback period, and the changes will be immediately reflected in the calculations.
The results will all be shown in the rental strategy section of the page, which includes all the calculations that you need to make wise investment decisions and determine the profitability of the rental property that you’re analyzing.
Since the metrics I mentioned above all require these values for their calculations, any changes that you make to any of the expenses or financing method will be immediately reflected in the results, and you will be able to see the cap rate, cash on cash return, and the cash flow of the property based on the values you’ve entered.
Additionally, the page includes a section that shows you what the investment payback period of the property will look like, allowing you to see how much time it will take the property before it fully pays back its price and starts generating pure returns on your investment.
When it comes to neighborhood or market analysis, Mashvisor’s real estate analysis software uses the analytics of all properties within each market to determine the average performance of rental properties in that market and set the average values, which can then be used to compare properties and see which properties are performing above or below the market’s average.
All of these analytics will be provided to you for both short-term and long-term rentals, allowing you to compare the two rental strategies and decide on the one that suits you the most or that generates the highest returns before you can make your decision.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Bottom Line
As you can see, real estate analysis software provides you with everything you need to make wise investment decisions, and it saves you months’ worth of research and data gathering, allowing you to find the best real estate investment deals on the market in the least amount of time in order not to miss the opportunity and compete better with the other investors in that market.
If you’re looking to invest in rental properties, then I highly recommend you check out Mashvisor’s real estate analysis software and see how easy it is to invest in real estate and find the best investment properties to invest in and become a successful real estate investor.