Many real estate investors nowadays are resorting to buying a multi family home for investment because these types of properties show a high return prospect. When you are looking into buying a multi family home of this kind, be sure to select a location with a growing population, high demand, high rental income, and low vacancy rates. Of course, finding a profitable property in a location with such criteria can become assiduous. However, there are various online real estate investment tools that will help you refine your search and invest in a multi family home that will bring about the highest returns.
So, what are the must-have real estate investment tools that investors should use to successfully achieve their goals? Below, we list 3 of those tools and what they can do for a multi family investor. However, before we delve further into the various real estate investment tools, let’s talk about why buying a multi family home is a smart investment decision.
Why Buying a Multi Family Home Is Wise
First, buying investment property of this kind will achieve two things: appreciation and positive cash flow. When you are investing in a multi family home, you are more likely to get more revenue than if you were to invest in a single-family home. This is because a multi family home offers more residential units that you match renters to and earn profit from. Although a multi family home may not appreciate as fast as a single family home, you can install different amenities to increase the property’s value and force appreciation. For example, you could add a parking space or a laundry room to drive up the value of the property.
Second, buying a multi family home is easier to finance. Lenders are more motivated to lend to a multi family investor as there is more of a guarantee that the rental income generated from the various residential units will cover the loan payments made.
Third, investing in a multi family home with 6 residential units, for example, comes with fewer risks. This is because if one of the units is not rented out, the rental income achieved from the remaining five will offset the vacant residential unit. You will still be able to make money and generate positive cash flow from the other units.
3 Must-Have Real Estate Investment Tools for Buying a Multi Family Home
#1 Heatmap Analysis Tool
You might be wondering how to buy a multi family home that can give you all the above-mentioned benefits. When you are buying a multi family home, you want your first step to be finding the right location with the highest potential for profitability.
So, how can you find the best places to invest in multi family homes for sale? Well, the heatmap analysis tool has emerged to help real estate investors find properties within locations that offer the best return on investment. Mashvisor’s heatmap, for example, enables real estate investors to find income properties by identifying neighborhoods that have listing prices within their budget as well as high cash on cash return, rental income, and Airbnb occupancy rate. This data is based on rental comps, past performance, and predictive analytics.
Mashvisor’s heatmap analysis tool eliminates the messy work of analyzing real estate investment markets and gives you the data first-hand, eliminating the use of various sources. It’s the fastest way to unlocking money-making areas.
#2: Property Finder Tool
Traditionally, when searching for income properties, you would just drive around a neighborhood looking for homes with a “For Sale” sign, or otherwise scavenge the newspaper for listings. Nowadays, in the age of the internet, many tools have emerged that eliminate the hassle of an investment property search. The property finder tool is the ultimate tool for finding the best income properties based on the user’s preferences and search criteria. When you are looking to buy a multi home within a certain area, the property finder tool will allow you to easily set your preferences by using filters. It will then give you a list of multi family homes with a high ROI that match your criteria.
Typically, most property finder tools will use the type of data that their platform or website has in order to provide listings. Mashvisor has access to data from multiple reliable sources so the property finder tool utilizes a wide range of real estate comps, analytics, and metrics along with Mashvisor’s unique algorithms to provide real estate investors with the highest ROI properties.
#3: The Investment Property Calculator
Having explored and utilized the aforementioned tools, you will have a list of the most suitable multi family homes. Now, you want to assess the cash flow and derive calculations pertaining to your unique financial situation. That’s where the investment property calculator comes in. An investment property calculator is a tool that provides real estate investors with a wide range of automatic calculations and predictive figures for an income property. The calculations and figures are based on the investor’s input of the associated rental property expenses and financing. Mashvisor’s investment property calculator, in particular, will provide you with the following numbers:
- Median property price
- Average rental income
- Occupancy rate
- Average cash on cash return
- Average cap rate
What distinguishes Mashvisor’s investment property calculator from others is the recommendations that it further provides beyond the metrics calculated. The aforementioned numbers are available for both the traditional and Airbnb rental strategy for every investment property. So, the tool will advise you on the optimal rental strategy. Additionally, Mashvisor’s tool will help you decide on the most appropriate financing strategy- whether to pay with cash or mortgage.
The Bottom Line
Buying a multi family home and renting it out is a money-making strategy and so many real estate investors have resorted to this type of rental property. In order to meticulously assess the profitability and ensure a high return on investment, resort to the aforementioned real estate investment tools.
Start out your 14-day free trial with Mashvisor now to try them out.