In real estate investing, rental data is such a great necessity that any investor will go to any length to access the latest information.
Any real estate investor worth their salt knows how stats and information used to be a hit-or-miss thing in the past. Gathering accurate market information and data, especially for out-of-state investments, was pretty hard to do. You need enough time and money to make several trips to do your own research.
Table of Contents
- Defining Rental Data
- How to Interpret Rental Data
- How to Use Rental Data to Find a Profitable Rental Property on Zillow
Today, with the use of technology, acquiring the necessary rental market data for income property investments is a lot easier and more efficient. However, getting rental data is one thing; knowing how to use it is another, especially when data analytics are involved.
What should an investor do with the long term or short term rental data? How does it figure into real estate investing? How does one interpret market data for rental properties? And most importantly, where can you find the right rental data to use for data analytics?
In this blog, we will talk about rental data, its importance to real estate investors, where to find them, and most importantly, how to put them to use for investors to make wise decisions. We will also show you how to utilize rental data from Mashvisor in ways that will benefit you, even with property searches on other platforms.
Defining Rental Data
Most real estate investors look for investment properties that don’t cost an arm and a leg but will also give them a decent enough profit to generate a good cash flow. It is not dependent on whether they intend to rent the property out as a long term or vacation rental or plan to invest and fix and flip houses. The goal of each investor is to make a good return on investment.
For an investor like yourself to achieve your investment goals, you need to perform extensive due diligence so you can make accurate projections and computations. Making sure the math checks out is vital to any investment venture, especially in real estate, where a lot of money is involved.
While there are several ways of investing in real estate, one of the most popular options plenty of investors take is rental properties. And one of the ways to ensure a good ROI for rental property investments is to have the correct rental data on hand.
Rental data, by definition, is simply important information about rental properties that give investors an idea of a specific property’s profitability. It includes, but is not limited to, the following information:
- Number of market listings
- Monthly rental income
- Average cash on cash return
- Average cap rate
- Average occupancy/vacancy rate
When considering starting a rental property business, regardless of whether it’s a long term rental or a Airbnb rental business, you need to take all of the above data into consideration.
Rental Analysis: What Is It?
Obtaining data is just one of the many steps necessary to complete a good feasibility analysis on one property. After getting all the required information, you must ensure that the numbers align with your criteria and investment goals. This is what rental analysis is all about.
A rental analysis takes whatever data and statistics you have and cross-checks each of them against your ideal projections to see whether a property is worth paying for or not.
The thing about rental analysis is that it is a very taxing and exhausting process that requires lots of time and effort on just one property. Now, imagine just how long the process will be if you’re actually considering several properties. You need to analyze each property so you can narrow down your choices to the best option that you can afford.
Fortunately, a website like Mashvisor exists. One of the main reasons for its existence is to help real estate investors perform highly efficient real estate analysis in a fraction of the time. It offers users several tools that make analyzing long term and vacation rental data a smoother process.
For instance, if an investor is considering buying an investment property in Austin, TX, all they need to do is enter the location in the search field. Search results for available rental properties will show up on the page. You can navigate through the different tabs and filters to find out the important long term and Airbnb rental market data in Austin.
Here is the latest long and Airbnb rental market data for Austin, TX from Mashvisor’s October 23, 2022 report:
Austin, TX
- Median Property Price: $827,480
- Average Price per Square Foot: $1,241
- Days on Market: 39
- Number of Long Term Rental Listings: 972
- Monthly Long Term Rental Income: $2,186
- Long Term Rental Cash on Cash Return: 0.94%
- Long Term Rental Cap Rate: 0.95%
- Price to Rent Ratio: 32
- Number of Airbnb Rental Listings: 3,763
- Monthly Airbnb Rental Income: $3,076
- Airbnb Rental Cash on Cash Return: 1.47%
- Airbnb Rental Cap Rate: 1.49%
- Airbnb Rental Daily Rate: $231
- Airbnb Rental Occupancy Rate: 44%
- Walk Score: 51
Based on the above numbers, investors already get an idea of whether investing in Austin, TX is good for them or not. The main determining factor is the investor’s goals and how the market’s performance fits them.
We will go into further detail about each of the numbers in a bit.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
The Benefits of Rental Data to Real Estate Investors
We cannot stress enough how beneficial rental data is to real estate investors and entrepreneurs looking to start a rental property business. For those wondering how to invest in real estate, know as early as now that you should never get into the rental property business without the information and data required to perform accurate investment property analysis.
Greater Market Insight
Obtaining all the necessary data will give you a better understanding and insight into the market you’re considering. Gone are the days of estimating rental rates manually. When done the old-school way, landlords tend to either overestimate or underestimate their properties’ rental value.
Setting the Right Rental Rates
Rental data analysis gives them market-accurate figures that allow them to come up with competitive prices. Having the right rental rates results in higher chances of occupancy, which leads to higher and more reliable monthly rental income.
Ensures the Investment Property Aligns With Goals
Rental data also gives investors an idea of whether a particular location is worth investing in or not. Let’s look at the Austin TX market again. Depending on their goals, investors might have different feelings about this particular location.
The low cash on cash return and cap rate for long term rentals will definitely not sit well with investors looking to rent a property out for more extended periods. On the other hand, the very good cash on cash return and cap rate on Airbnb rental properties make it a good market to start Airbnb rentals.
Other Factors That Affect Rental Data Analytics
On top of the conventional data that affect rental prices, several non-conventional variables also affect rental rates in a particular market. Things such as Walk Score, access to public amenities (hospitals, parks, schools, restaurants, public transportation, etc.), and even Yelp business reviews have a direct impact on the rental rates of a given market.
Advanced rental data analytics can also point investors to currently undervalued properties that have very high income-generating potential.
Whether you’re a real estate investor, a property manager, or an agent, being able to access accurate rental data is something that you would want to get your hands on. The information you gather will prove to be invaluable to your decision-making later on.
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Where Does One Get Rental Data?
The question now is, “Where does one get reliable rental data that’s highly accurate?”
If people from before did things the hard (and most often, inaccurate) way, there’s no excuse for investors today. Real estate websites like Mashvisor now provide online rental data. While you can still go out for a drive to look at several rental properties in your area, it will cost you a little more extra money and time to do.
On the other hand, online real estate marketplaces already provide you with lots of information you will need to make an informed decision.
One of the best ways to go about the acquisition of long term andAirbnb rental data is to go to Mashvisor. You can access its updated database that covers almost every real estate market across all 50 states.
Subscribers can access the site’s massive database and different investing tools. The tools include the real estate heatmap and rental property calculator to make investing quicker and more efficient.
To learn more about how Mashvisor can help you find lucrative investment properties, schedule a demo.
Mashvisor’s Real Estate Heatmap tool helps investors find profitable properties and make informed investment decisions.
How to Interpret Rental Data
Now that we know where to look for the most up-to-date information and data, what do they all mean? How can an investor use this knowledge to their advantage?
Interpretation of data is quite critical when it comes to data analysis. The more you understand what a certain statistic represents, the more you understand the market conditions and how they will affect your future investment.
On top of the median property price, the average price per square foot, and days on market, you also need to know the specific role that long term and Airbnb rental data play in determining whether a property is suitable for investing or not.
It’s quite important to know how much a single family unit is sold for in a given neighborhood because that’s where it all starts. But investment property analysis doesn’t end with the median price for single family homes and multi-family properties. You need to look deeper into the market if you are to make an accurate rental property analysis.
The following section breaks down the different factors investors need to look for when considering rental properties in any given market. The terms already speak for themselves, but for the following breakdowns, we will use the previously mentioned Mashvisor data on Austin, TX, as our example of interpreting data.
Long Term Rental Data
Below are the things you need to know if you’re considering going the long term rental route:
Number of Long Term Rental Listings
The number of long term rental listings in an area indicates how many long-term rentals are publicly listed and available. In this instance, there are 972 available listings in Austin, according to Mashvisor. It means that there’s plenty of competition in this Texas city.
You will also need to consider how much competition you will be facing if you are to proceed. The high number of available long term rental properties can mean either a low demand for long term rentals or a slight overabundance in supply.
Monthly Long Term Rental Income
The monthly long term rental income is basically what tenants pay their landlords monthly for renting a property long-term. Austin’s monthly rental income of $2,186 is close to the average national rental rate. It makes renting a house in the town affordable to the average American tenant.
Long Term Rental Cash on Cash Return
Cash on cash return is one of the determiners used by investors to project their ROI. Cash on cash return is just your annual pre-tax cash flow divided by the amount of cash invested on the property.
Experts and industry professionals all agree that healthy cash on cash return is between 8% and 12%. However, realistically speaking, such deals are few and far between. So, cash on cash return that is 2.0% and above is already considered good.
In this case, Austin’s long term rentals only gain a 0.94% cash on cash return. Perhaps, it is brought about by the overabundance of rental inventory. Getting into a long-term rental business in the town now might not be as lucrative as one would expect.
Long Term Rental Cap Rate
Cap rate is another metric investors look at to determine profitability. The main difference between a cap rate and cash on cash return is that with the former, the NOI is divided by the property’s market value and not the total amount of cash invested.
The cap rate for long term rentals in Austin is a low 0.95%, which makes plenty of sense given that cap rates and cash on cash return rates aren’t that far off from each other.
If the cash on cash rate for the Texan city implies that investing in long term rentals is a bit risky at this time, the cap rate pretty much confirms it.
Price to Rent Ratio
Investopedia defines the “price to rent ratio” as a metric used by real estate professionals and investors to see if it’s better to buy a property in a neighborhood or just rent out one. It is divided into three categories:
- A low score of 15 and below – Means that property prices are lower compared to rental rates, which means it is better to just buy than rent.
- A medium score of 16 to 20 – Indicates that there is a healthy balance of property and rental prices in the market. Rental demand and profitability are both moderate, which means that whether people decide to rent or buy doesn’t make that huge a difference to an investor.
- A high score of 21 and above – Implies that housing affordability is a huge challenge, and it makes more sense to rent out in markets like this than to buy a house.
In Austin’s case, its price to rent ratio is a high 32, which means people are most likely in the market looking for property to rent.
Short Term Rental Data
Investors who are thinking of acquiring properties and getting them listed on Airbnb and other similar platforms should know the following market data:
Number of Airbnb Rental Listings
Similar to long term listings, it shows the number of available rental properties listed on Airbnb, Vrbo, and other similar platforms. The 3,763 Austin Airbnb rental listings may seem like a lot. Still, it is a healthy number based on the size of the city and what it can offer tourists and visitors.
Austin is near San Antonio and the beautiful suburban town of New Braunfels, which makes it a desirable location for tourists and visitors who own a business in both areas.
Thousands of people flock to Austin yearly and there is no shortage of visitors, especially following the lifting of COVID-19 travel restrictions. Adding one more Austin vacation rental property on Airbnb might actually be a good thing for the town’s economy.
Monthly Airbnb Rental Income
In most cases, the average monthly Airbnb rental income is quite larger than the average long term rental income. It is quite evident in Austin, as the latest data shows, that Airbnb rental property owners get about $3,076 monthly.
The above figure may be nearly twice as much as what long term rental landlords are getting from their tenants. However, one of the downsides is that Airbnb rental income still depends on the occupancy/vacancy rate of the area.
Airbnb Rental Cash on Cash Return
The Airbnb rental cash on cash return rate is quite similar to its counterpart, only that it is computed for vacation rental properties. The same set of standards is used for Airbnb rental cash on cash return.
Given that Austin, TX offers only a 1.47% cash on cash return rate tells investors as far as vacation rentals are concerned, it is not that healthy of a market for Airbnb rental investments if you’re looking for dollar-for-dollar returns.
Airbnb Rental Cap Rate
Similarly, the Austin Airbnb rental cap rate of 1.49% confirms that the place is a tough market to set up a Airbnb rental business.
Airbnb Rental Daily Rate
Unlike long term rentals, short term rentals can be rented out on a per-day basis, depending on the guest’s needs. The daily rate, coupled with the occupancy rate, will ultimately determine the average monthly rental rate for a Airbnb rental owner or Airbnb host.
According to Mashvisor’s latest data, the average Airbnb rental daily rate in Austin is a very reasonable $231.
Airbnb Rental Occupancy Rate
Occupancy rate will make or break a vacation rental business. A low occupancy/high vacancy rate means that the Airbnb rental owner or Airbnb host will most likely lose more money maintaining the property.
On the other hand, a high occupancy/low vacancy rate means that the rental property is generating enough positive revenue to take care of itself and give the owner a decent profit. The higher the occupancy rate, the better the monthly rental income will be.
Austin’s Airbnb rental properties show an average occupancy rate of 44%, just a few points shy of 50%, which still makes for a decent number considering its size. Airbnb rental occupancy rates tend to vary depending on the season.
How to Use Rental Data to Find a Profitable Rental Property on Zillow
When it comes to real estate investing, there’s no other name in the industry that is most associated with real estate marketplaces than Zillow.
Zillow, like Mashvisor, is a real estate platform that lets you search for properties in different parts of the country. And just like Mashvisor, Zillow also offers its users access to rental estimate data.
While the website doesn’t disclose the formula it uses to come up with its Zestimate figures, it does say that it utilizes statistical and machine learning models to analyze data points for each property.
Finding a rental property on Zillow isn’t complicated. The process is quite simple and straightforward. Here’s how it goes:
Step 1: Visit Zillow’s Rental Home Page
Just enter the city, zip code, neighborhood, or address in the search field and click Search.
Step 2: Filter Your Search
Filter your search according to your preference: price, property type, number of bedrooms, parking, pet policy, and more. You can find all the listings that match your criteria on the right side of the page.
Step 3: Save Your Search
Once you’re done with the search and you want to receive updates on newly available properties or updated listings, click on the Save Search button.
Step 4: Do The Same for Other Rental Comps
Do the same for other rental comps and compare the data you find for every similar rental property in the area.
What’s a Better Alternative to Zillow?
While Zillow is an excellent platform, a lot of its users are second-guessing the quality of data found on the website. For this reason, we recommend using Mashvisor as your property search engine instead.
Mashvisor is known for its huge database containing accurate information on almost all markets in the US. The website regularly updates Its database to allow users to obtain the most accurate and realistic investment property analysis.
It also offers tools that allow you to search for properties that line up with your goals in neighborhoods with great potential for profit.
Wrapping It Up
Rental data should never be taken lightly where real estate investing is involved. It gives you greater insight into what a neighborhood offers and helps you become more aware of actual market conditions. Access to high-quality rental data is also important as it will give you the most accurate and realistic ROI projections on a subject property.
Now that we’ve talked about the importance of rental data and how to apply it to your investment decision, it is also important for investors to obtain the right investment tools. A website like Mashvisor not only provides a massive database filled with highly accurate data but also a wide array of investing tools that make the process simpler and easier.
Mashvisor users are confident with the data the website provides, as it is regularly updated. The site pulls its data from reliable sources, such as Realtor.com and Airbnb. Some of its most useful and popular tools are the property search tool, real estate heatmap, and investment property calculator.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.