Mashvisor Tools Be a Smart Real Estate Investor: Finding Income Properties Using a Heatmap by Daniela Andreevska January 25, 2018December 3, 2021 by Daniela Andreevska January 25, 2018December 3, 2021 We live in a smart world: smart phone, smart watch, smart TV… So, why not smart real estate investing?! To be a smart real estate investor, you should start finding income properties using a heatmap. You must have come across a heatmap many times before, at least in the context of presidential elections and other political and economic events. Basically, a heatmap is a visual representation of some numerical data, using different colors to represent different ranges or percents. If you can use a heatmap to see which candidate won the presidential elections and to find the most popular cafés in an area, you can definitely be using a heatmap for finding income properties. Actually, that’s a smart way to make the best real estate investments for the maximum return on investment. When real estate investors have to decide where to buy an investment property, they look for locations with the best real estate investment performance and the best return on investment metrics. Using a heatmap is the best way for finding income properties which yield high profitability for real estate investors as they help them identify areas with the lowest/highest listing price, the lowest/highest cash on cash return, the lowest/highest rental income, and the lowest/highest Airbnb occupancy rate. Thus, using a heatmap for finding income properties allows real estate investors to avoid locations with high listing price, low cash on cash return, low rental income, and low Airbnb occupancy rate and instead to find areas with low listing price, high cash on cash return, high rental income, and high Airbnb occupancy rate. All in all, using a heatmap is a fast way to locate money making areas in a city, the dream of every real estate investor. Related: Finding Income Properties Using a Heatmap Where Can a Real Estate Investor Find a Heatmap? We don’t mean to say that you can’t buy good investment properties without using a heatmap. However, you will have to spend lots of time researching investment properties, going through tedious searches, analyses, and calculations. Also, you will need to rely on multiple real estate investing resources and numerous real estate websites to reach a sound investment decision. Or, instead, you could use Mashvisor’s heatmap to make the best real estate investments always. Mashvisor’s heatmap gets straight to the point and tells a real estate investor which area has the highest return on investment based on real estate comps and past rental performance. In order to be fully able to appreciate the need for using a heatmap for finding income properties, let’s have a look at what information exactly Mashvisor’s heatmap provides for real estate investors. Related: How Should You Use Mashvisor’s Heat Map Generator to Your Advantage as a Real Estate Investor? What Metrics Does a Heatmap Provide? Now that we know that using a heatmap is the most effective way for finding income properties with high return on investment potential, let’s take a look at what exactly we get from them. Since the best way to learn is through examples, we will take Miami, FL as an example here and show all the various metrics which Mashvisor’s heatmap will tell us about related to investing in Miami real estate at the moment. Listing Price Any real estate investor first needs to know how much an investment property costs before he/she starts considering whether it will be a profitable investment or not. Regardless of whether you invest in real estate close to home or out of state, you have to stick to your budget, you have no other choice! Thus, Mashvisor’s heatmap will first tell you which areas of a city have the cheapest rental properties and which areas have the most expensive investment properties, and – of course – which locations offer a medium listing price for real estate properties. Remember: When using a heatmap for finding income properties, the red means less, and the green means more. So, in terms of listing price, you want to stick to the red areas on Mashvisor’s heatmap if you are looking for affordable rental properties. Cash on Cash Return Cash on cash return is the metric which Mashvisor’s heatmap provides as a measure of the return on investment for real estate properties. The reason to use cash on cash return instead of the more traditional cap rate is that the cap rate ignores the method of financing of rental properties, which is a major determinant of profitability. When using a mortgage to finance an investment property, it is important to use cash on cash return. The formula is as follows: Cash on Cash Return = Net Operating Income (NOI)/Invested Cash x 100 One of the main advantages of Mashvisor over other real estate websites is that it helps real estate investors choose the optimal rental strategy when finding income properties. Thus, Mashvisor’s heatmap includes traditional and Airbnb cash on cash return. Rental Income Rental income is what makes money for real estate investors in residential properties. That’s your salary as a real estate investor. It’s great news for investors that using a heatmap allows them to immediately identify areas in a city with high rental income. Otherwise, they need to spend tons of time researching rental properties to find rental comps. Mashvisor’s heatmap, though, shows you which locations to invest in for high traditional and Airbnb rental income. Airbnb Occupancy Rate Since we are discussing the possibility of investing in Airbnb rentals here, we have to discuss the Airbnb occupancy rate. Since Airbnb rental income is received per night and not per month, the Airbnb occupancy rate affects the monthly rental income directly. Using a heatmap allows real estate investors to find the areas with high Airbnb occupancy rate. Just remember to follow the green areas on Mashvisor’s heatmap. Related: How to Find the Best Investment Property Using a Heatmap Any real estate investor knows that finding income properties in optimal locations requires a lot of hard work. Researching investment properties means: finding a city with a real estate market which is good for investments; finding out the right neighborhoods to invest in real estate in this city based on your budget; figuring out how much rental income properties make through the traditional and Airbnb rental strategy; and calculating how much your return on investment would be. As we have just seen, using a heatmap eliminates the need for such a lengthy and complex process of analyzing real estate investments, providing readily available first-hand data. The major advantage of using Mashvisor’s heatmap for finding income properties is the ability to quickly pick a focus area in a city, even when investing out of state. So, what better way to find hot markets to invest in than using a heatmap?! To start using the best heatmap around for finding income properties with high return on investment, sign up for Mashvisor now. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL Cash on Cash ReturnHeatmapOccupancy RateProperty PricesRental IncomeTechnology 0 FacebookTwitterGoogle +PinterestLinkedin Daniela Andreevska Daniela is Marketing Director at Mashvisor. She has been writing about real estate investing for a number of years. Previously, she worked in economic policy research and fundraising. Daniela holds a Master degree in Middle East and Mediterranean Studies from King’s College London. Previous Post How to Make Any Rental Property into a Positively Geared Investment Property Next Post How Can You Use a Rental Potential Calculator to Buy Investment Properties? Related Posts How Can You Use a Rental Property Calculator to Buy the Best Investment Properties? How to Easily Find Houses Under 100k for Investment Analyzing Real Estate Investments Using a Single Online Tool 3 Airbnb Tools You Need for Buying Property Try Out This Rental Yield Calculator in 2020 The Best Vacation Rental Calculator: A Complete Mashvisor Review Airbnb Rentals: Finding Income Properties Using a Heatmap Where can you find a rental property calculator? Where to Find the Best Beginner-Friendly Cap Rate Formula Calculator How Do You Buy the Best Investment Properties With the Use of a Rental Property Calculator? What Are the Basics and Benefits of Heat Map Analysis for Finding Rental Properties? 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