Real Estate Analysis Every Real Estate Investor Needs These Real Estate Analytics Tools by Nadia Abulatif January 19, 2018February 8, 2022 by Nadia Abulatif January 19, 2018February 8, 2022 We believe that the number one rule for success is having the right tools. The right tools will always take you to the right place. Therefore, if you are investing in real estate, here are the real estate analytics tools that you need for success. Related: How Should You Use Real Estate Analytics to Your Advantage as an Investor? What are real estate analytics tools? Real estate analytics tools are tools that real estate investors use to estimate the return on investment for a certain property. This makes them predictive analytics tools that give you an estimation of a certain value you are trying to figure out. These tools are also the ones that will show you how to value a property in the first place. So, when we are talking about tools, these are the must-have ones for every real estate investor. This is especially true for those who are just starting in real estate investing. How do real estate analytics tools work? The way real estate analytics tools operate is simple. All they do is take into consideration a few figures and factors and come up with the value you are looking for. They depend on real estate market analysis as well as investment property analysis to predict values. These also include variables such as the net operating income, the cash flow, the cap rate, the cash on cash return, and the value of the property. Not only that, but they also perform real estate market data analysis which helps predict future trends in a certain real estate market. What are the real estate analytics tools that every real estate investor needs? Though there are many tools that real estate investors need, the two most important ones are the cap rate calculator and the cash on cash return calculator. They both function as a return on investment calculator; however, they are different. Here is an in-depth look at each of the tools: The cap rate calculator: The cap rate calculator is one of the real estate analytics tools that is a must-have. Moreover, it is one of the hottest tools in real estate. However, before we talk about the calculator as a tool, let us tell you what a cap rate is. The cap rate, or the capitalization rate, is simply an estimation of a return on investment for a specific property. Keep in mind, though, that cap rate is mostly used for long-term investments, especially in commercial real estate investing. Therefore, you cannot use it for short-term investment strategies such as fix and flips. The cap rate formula is pretty simple. You calculate the net operating income of your investment property and divide that by its market value. As for the cap rate calculator, it is the tool that will perform calculations based on this formula for you, thus saving you time and efforts of trying to figure out these values yourself. Remember, it is a type of predictive analytics tools. This makes it useful in terms of making the right investment decisions that will help you make money out of your investments. The great thing about this tool is that it calculates more than just the cap rate. It also calculates the variables involved such as the net operating income. It will also help you compare multiple investment properties as well as determine the amount of rent you should charge for your rental property. The cash on cash return calculator: When it comes to making money in real estate, this tool will do magic for your business. So, what is cash on cash return? The cash on cash return is one of the most basic real estate metrics used by real estate investors. Essentially, it calculates the rate of return on an investment property based on the cash invested. In other words, it only takes into consideration the actual amount of dollars invested. The cash on cash formula is the following: CoC return = Net operating income (NOI)/Amount of cash invested x 100% This might look like a lot of work for a real estate investor, especially for someone who is just starting in real estate investing. This is the very reason you need a cash on cash return calculator. Instead of wasting your time trying to figure out the whole thing, this calculator will cut it short for you. The great thing about this tool is that it will give you a more accurate rate of return on your investment property. In addition to that, it will make it much easier to compare the different investment properties you have in hand. Keep in mind, though, that it is one of the predictive analytics tools. So, do not expect to have exact figures unless you already own the property. Can a real estate investor do it alone without using real estate analytics tools? Well, there is almost nothing that a human being can’t do him/herself. However, why do it yourself when you have the tools that will make everything easier?! Your number one goal as a real estate investor is making money with the least time and effort. That is exactly why these real estate analytics tools are there. Moreover, they will save you the pain of errors. You are a human being, and you will make mistakes. Now imagine doing manual calculations with an error at some point in the process. This will multiply the error, and you might not figure it out. So, why bother doing it alone when you can use tools that are guaranteed?! Related: Why an Investment Property Calculator Is Better Than Spreadsheets Mashvisor’s investment property calculator As always, Mashvisor has the best when it comes to real estate investing. Mashvisor has put everything together for you. Instead of using these real estate analytics tools separately, you will have them all in one: Mashvisor’s investment property calculator. The best feature of our investment property calculator goes beyond just numbers. It will use all the up-to-date real estate market analysis to scan the location of your investment property. Therefore, it will provide you with the best rental strategy and the best investment property type to invest in. Related: Mashvisor: The Best Rental Property Calculator You Could Ask for Why wait? Sign up to Mashvisor to learn all about real estate investing. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Nadia Abulatif Nadia Abulatif is an experienced Content Writer at Mashvisor. She was a trainee lawyer before switching to writing about real estate. She is currently doing an LL.M. in Human Rights and International Law. Previous Post Real Estate Investments Location: The Best Neighborhoods for Nashville Residential Income Properties Next Post Landlord Tenant Law: Basics Every Real Estate Investor Should Know Related Posts What Rental Property Return on Investment Can You Expect? Housing Market Data: The ONE Thing You Need to Get Started in Real Estate A Guide to the Cost Approach to Real Estate Valuation FAQs: What Is Cap Rate in Real Estate? Arizona Real Estate Market 2018 – The Place to Invest This Year BiggerPockets Rental Property Calculator: A Full Review What You Must Know About Real Estate Investment Analysis How Is Real Estate Market Analysis Different from Stock Market Analysis? 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