The use of big data has permeated a wide range of sectors. In fact, professionals from every field rely on it to improve the accuracy and effectiveness of their analysis. As you would expect, big data had the same impact on the real estate industry as well. Over the past decade, big data has come to occupy a central place in real estate analysis and every savvy real estate investor relies on it to provide an accurate overview of the housing market. So what exactly are the benefits of big data for residential real estate? And how to use big data for real estate analysis?
In this article, we will highlight the importance of big data for real estate and show you how to incorporate it into your business.
How Big Data Transformed the Real Estate Industry
Real estate big data has become essential to various aspects of the investing process. Agents, real estate investors, and financial entities are leveraging it to maximize their return on investment and ensure the best possible deal. Here are some of the ways big data has impacted the industry:
- The use of big data in real estate has made identifying housing market trends a relatively easy process. Investors can use a host of software tools that provide an in-depth look at various real estate trends.
- It has streamlined the process of financing income properties. Real estate investors who are planning on buying investment property can expect faster loan processing because most financial institutions use big data to quickly assess the viability and the risks of a particular mortgage.
- The use of big data for real estate helps achieve accurate pricing during appraisals and when setting rental rates.
- Big data has significantly reduced the risks and uncertainties that are associated with real estate investing. In fact, the use of housing market and property data has improved the investor’s odds of finding top rental properties and limited the impact of market swings.
After going over the impact of big data in real estate, let’s delve deeper into what makes the use of big data such a crucial part of real estate analysis.
The Importance of Big Data for Real Estate Analysis
Rental property analysis is a useful tool for buyers and sellers alike. In fact, knowing how to analyze investment property is what allows both parties to assess the asset’s potential and determine its true value. Like we mentioned above, big data has had a massive impact on real estate analysis and its use has become ubiquitous in the industry. Below is a detailed look at why you need big data for real estate analysis.
Related: How to Analyze Real Estate Deals: A Beginner’s Guide
1- It helps you make smarter decisions
As it is the case with any venture, there are some risks that are inherent to the housing market. Being able to mitigate these risks and navigate various market trends is essential for generating a profit. This is where real estate analytics comes in. In fact, the use of real estate data has entirely replaced gut decisions with metric-driven practices. Investors can now make decisions that are grounded in data rather than vague and untested strategies.
2- Big data allows you to zero-in on profitable investment properties
Finding top real estate markets and investment properties for sale is an integral part of real estate analysis. In the past, this process was quite tedious and required a fair amount of work and resources. Fortunately, this is no longer the case as the combination of big data with AI and predictive analytics has made property search extremely simple. A great tool that makes use of these components is Mashvisor’s Property Finder. Thanks to its effective filters, machine learning algorithms, accurate location data, and high-end AI technology, this tool is able to provide top results in a matter of minutes.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
3- Using big data saves you a lot of time
One of the main benefits of using big data for real estate analysis is the sheer amount of time that it saves you. Incorporating residential real estate big data into your analysis helps you assess the profitability of an investment property in an almost instant manner. In fact, there are multiple software solutions that use big data analytics to provide you with highly accurate ROI estimates in a timely fashion. A perfect example of this is the investment property calculator. This tool serves as a one-stop-shop for every step of your real estate analysis. Moreover, the calculator can recommend the optimal rental strategy based on property and real estate market data.
4- Big data can help you keep expenses in check
Real estate investments come with various expenses. If not managed properly, these costs can quickly eat away at your return on investment. Relying on big data for residential real estate is a great way to mitigate this risk. For example, predictive analytics can help you identify all the expenses that are associated with operating an income property. By projecting a property’s costs, big data enables you to optimize your expenses and budget for them properly.
Related: 9 Rental Property Expenses Real Estate Investors Shouldn’t Forget
5- Utilizing Airbnb data results in more accurate pricing
One of the main concerns when investing in short term rentals is figuring out how much you should charge your guests. An easy way to ensure accurate pricing is to rely on Airbnb data and analytics. Tools such as Mashvisor’s rental property calculator help you set the right price by giving you access to rental income estimates based on reliable Airbnb comps and providing you with an in-depth look at all the metrics that determine the rental value of your property.
Related: Airbnb Pricing: How Much to Charge for Rent
The Bottom Line
The use of big data for real estate is expected to increase in the next few years. As processing technology continues to expand, real estate investors can look forward to more efficient data handling as well as more accurate results. If you have yet to incorporate big data into your real estate analysis, sign up to Mashvisor and start using our tools to maximize your return on investment.
To learn about your options for signing up for our services, click here.