Before buying an investment property, the real estate investor should conduct a research, ensuring that buying an investment property is the right decision. We all know that and have heard this statement millions of times. Then, why isn’t every real estate investor a millionaire? One of the reasons might be the way of conducting real estate market research. Not every real estate investor has enough patience to go through the whole process of real estate market analysis the proficient way. Aha! The secret that the most successful real estate investors are keeping is exactly in the way of conducting a real estate market research. This blog will reveal the secret of conducting a real estate market analysis the proficient way. So, are you ready to invest in the best real estate investments and start making money in real estate? Then, keep on reading!
#1 Why Conducting a Real Estate Market Research the Proficient Way Is Important
This may seem obvious. Still, many beginner real estate investors do the same mistake when entering the real estate housing market. In order to make clear the importance of real estate market research, let’s define once and for all the weight of real estate market research in the success of the investor.
Why Is It Important?: Avoiding the Chance of Overpaying for Income Properties
How would you feel if you and your friend were to buy two similar investment properties in the same neighborhood with similar characteristics, yet, you end up paying $10,000 more, for instance? This is one of the reasons you should conduct the real estate market research. By knowing the housing market prices, you will always have a chance to negotiate for a lower price and avoid overpaying the market value of a property.
Why Is It Important?: To Be Able to Sell Income Properties
Without knowing the state of the housing/ rental market, it might be a challenging task to sell the rental property for the desired price. Moreover, your investment property might be located in a buyer’s market, meaning that it may take longer for your income property to be sold. Further, not knowing what is the optimal price for your rental property may play out like a bad joke. For example, you may ask for too little for what the investment property is worth. You can assume that this is not the way of making money in real estate, right?
#2 How to Conduct Real Estate Market Research the Proficient Way
Ready to start making money in real estate? Then, you should be ready to learn how to do the real estate market research in order to select the best real estate investments.
Step One: Investment Property Analysis
Whether you are selling or buying an investment property, you should conduct investment property analysis first. You analyze your target property in terms of the age of the rental property, square footage, location, facilities around, etc. These are the aspects that have the influence on the value of the rental property. Moreover, real estate metrics should be calculated in order to have a clear picture about the profitably of the investment property in question. This might sound easy: collecting the info, calculating real estate metrics and so on and so forth. Still, the human factor is present, and the chance of making a small mistake is there. So, in order to be sure that the required data is valid, it is suggested to use Mashvisor’s rental property calculator. Interested to learn more about investment property analysis? Make sure to read “Investment Property Analysis: Real Estate Investing.”
Step Two: Analyzing Real Estate Comps
After selecting and assessing the investment property, the most successful real estate investors come to the stage where they find the real estate comps. It is better if you select a minimum of three to five investment properties. Yet, if you have selected more, you will have more precise results. However, where can you find those real estate comparables? It is advised that the real estate investor should look for the real estate comps in different property listings, such as:
- Withdrawn Listings
- Pending Listings
- Active Listings
- Sold Listings
However, it may seem like a tough challenge to select only a few investment properties from the whole list. In order to ease the process, many beginner real estate investors use either a rental property calculator or Heatmap analysis. Rather than spending hours, days or even weeks trying to select the comps yourself, such real estate investing tools are the right “guns” you need in order to categorize as one of the most successful real estate investors.
Step Three: Comparing Investment Properties
At step three, the real estate investor is at the point when he/she should compare the data of the comps with the chosen investment. So, the next step is to begin comparing the chosen investment property and the real estate comparables to discover the market value.
#3 How to Make the Real Estate Market Research More Efficient
The tools that were mentioned are not the only real estate investing tools that should be used when conducting real estate market research. For instance, using the property finder tool is a great way to select profitable rental properties. Moreover, if you have extra cash in your pocket, you can hire a real estate agent who has the knowledge about the local housing market as well as the rental market, if you plan on becoming a landlord. Moreover, he/she will perform investment property analysis and real estate market analysis and provide you with the outcomes.
Hiring a Real Estate Agent
One of the great ways to conduct the real estate market research without any efforts is by hiring a real estate agent. A real estate agent is a licensed professional who has the right knowledge of the housing market. Moreover, due to the broad real estate network, he/she will be able to complete the property search in no time. However, the costs for his/her services as well as the speed of property search will depend on the experience of the real estate agent. Does the career of a real estate agent seem interesting when compared with other choices? Then make sure to read “How to Become a Real Estate Investor vs. Real Estate Developer vs. Real Estate Agent.”
Using a Property Finder Tool
One of the best real estate investing tools is considered to be the property finder. This is a digital tool with the main purpose of finding rental properties, investment properties, etc., based on the preferences of the real estate investor. If the real estate investor is looking for a certain type of real estate in a specific state or city, the property finder tool will provide the list of investment properties that match the criteria set by the investor. Different property finder tools will provide the data that their websites have. However, Mashvisor’s property finder tool will select only the investment properties with the highest potential for returns from the wide range of data. Interested to learn more about the property finder? Make sure to read “How to Find Investment Properties Using a Property Finder Tool.”
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.