In the world of real estate investments through rental properties, there are two main rental strategies which a real estate investor, or a landlord, can use: the traditional rental strategy (long-term rentals) and the Airbnb rental strategy (short-term rentals). While it cannot be said which rental strategy makes for the best real estate investments in all cases, it depends on each particular situation which strategy a real estate investor should go with. Let’s say your situation and preferences are such that you want to invest in traditional rentals, and you want to buy an investment property for this purpose. What’s the best way to do that?
The best way for finding income properties for traditional rentals (and for Airbnb rentals for that matter) is by using a heapmap. You have definitely seen a heatmap on regular basis before, though not necessarily in the context of real estate investing and buying investment properties. Chances are you have seen heatmaps during presidential elections and when looking for the best hotels or best restaurants or best cafes in an area. But let’s see how you can be using a heatmap to make the best real estate investments through rental properties.
What Is a Heatmap and What Is Its Use in Real Estate Investing?
The heatmap is a very simple concept, indeed. It shows various data in a visual form rather than a numerical form, with different colors representing different ranges or percentages. Being visual is what makes a heatmap very easy to read, interpret, and understand. So far so good, but we bet that you are still wondering how to go about using a heatmap for finding income properties to rent out as traditional rentals. Let’s have a look.
Real estate investors looking to buy an investment property to rent out search for locations with relatively low price listings (affordable rental properties) and relatively high return on investment (profitable rental properties). To sum up, real estate investors look for locations with high return on investment for the best investment performance, and using a heatmap facilitates finding income properties in such locations precisely. Using a heatmap in general, and using Mashvisor’s heatmap in specific, shows real estate investors the areas with low and high median property listing prices, low and high cash on cash return, low and high rental income, and others. What is best is that these real estate return on investment metrics are separated by rental strategy – for traditional rentals and Airbnb rentals – which allows real estate investors to focus on their preferred type of rental properties.
To sum up, when finding income properties, using a heatmap replaces the need for neighborhood analysis as it is a fast way to locate money-making areas in a city.
Related: Finding Income Properties Using a Heatmap
As many real estate investors are not familiar with the numerous advantages of using a heatmap like Mashvisor’s for finding income properties or simply don’t know where to find one, they have to analyze real estate investments the traditional way. They have to visit many different websites to learn more about a particular area, to see what they are supposed to look for in an investment property, and to find rental properties. Smart real estate investors, though, know to skip all these time- and effort-consuming steps by going straight to the point and using a heatmap, the results of which are based on rental comps and past performance.
To start using Mashvisor’s heatmap for buying the best investment properties for traditional rentals across the US, sign up for Mashvisor now.
How Is a Real Estate Investor Finding Income Properties for Traditional Rentals Using a Heatmap?
For finding income properties that will make the best traditional rentals, a real estate investor needs to use real estate comps – and rental comps – to know how much to expect to pay for an investment property, what rent to set, how much rental income to expect, and what profitability this will lead to. Using Mashvisor’s heatmap gives you exactly this kind of information, but much faster, more efficiently, and more precisely. Let’s have a look at the metrics which Mashvisor’s heatmap shows real estate investors to let them choose the right neighborhood for traditional rentals:
Related: How to Choose Rental Strategy: Finding Income Properties Using a Heatmap
Median Property Listing Price
Actually the listing price is the most important number when it comes to finding income properties. Even if you come across the most wonderful rental property around the globe but can’t afford buying it, it’s of absolutely no use to you as a real estate investor. Using Mashvisor’s heatmap will show you the most affordable and the least affordable neighborhoods for buying an investment property in a city. Just remember that red means lower median property listing prices, and green means higher median property listing prices. So, a heatmap helps you in finding income properties which are within your budget by clearly marking the different price ranges in different colors.
Traditional Rental Income
Rental income is how real estate investors make money from property investments. The bigger the difference between your rental income and your rental expenses, the stronger your positive cash flow, and that’s what all real estate investors aim for. With Mashvisor’s heatmap, you don’t have to search for real estate comps to estimate the traditional rental income that you will get from your investment properties. Using Mashvisor’s heatmap facilitates real estate investors in finding income properties with the highest potential to generate high traditional rental income and thus make money from real estate investing.
Related: Be a Smart Real Estate Investor: Finding Income Properties Using a Heatmap
Traditional Cash on Cash Return
Real estate investors aim at finding income properties with high profitability in order to make money from real estate. When choosing the best place to invest in real estate, you want to compare cities and neighborhoods easily to find the location with the highest average return on investment. Using a heatmap like Mashvisor’s allows you to do exactly that. Mashvisor’s heatmap focuses on the cash on cash return as the return on investment metric as it considers the method of financing rental properties, unlike the cap rate. So, with the help of a real estate heatmap, you can find the most profitable traditional rental property based on cash on cash return. To be finding income properties for traditional rentals with high potential to make money, go for the green color. Meanwhile, keep in mind that while most real estate experts say that good cash on cash return is above 8-12%, you have to be realistic as a real estate investor and consider investment properties above 5-6% in the current competitive real estate investment market.
In conclusion, using a heatmap is the best way of finding income properties for traditional rentals and of becoming a successful real estate investor in the US housing market. Mashvisor’s heatmap in specific makes the process of searching for investment properties much easier and more efficient by helping real estate investors find the best city and the best neighborhood for profitable real estate investing. Real estate market analysis and investment property analysis become a piece of cake with the use of a real estate heatmap. Mashvisor’s heatmap will let you buy the best investment properties for traditional rentals each and every time through accurate calculations and estimates of return on investment based on traditional and predictive analytics in addition to comparative and historical data.
To start searching for the best traditional rentals across the US using Mashvisor’s heatmap, sign up now.
If you nevertheless think that Airbnb rentals might be the right real estate investment strategy for you, then learn how to go about finding income properties for Airbnb rentals using a heatmap here.