Finding an investment property with good returns is the ideal goal for any real estate investor.
The method to go about it depends on each investor; some pay a real estate agent to do the job, others are more hands on and use real estate search engine websites like Mashvisor to find lucrative real estate investments from a click of a button. Nevertheless, it is no secret that finding the perfect real estate investment match is difficult and time consuming, especially if we are in a seller’s market and the competition is fierce.
Real estate is all about “first come, first served” mentality. You have to conduct lots of market research and property analysis and do it quickly to find the perfect property which will reap long term rewards.
Related: Do Your Investment Property Search Like a Real Professional
It might be overwhelming to aggregate real estate comps on your own to assess an investment property‘s worth in the long run. So, to make your life easier, Mashvisor allows you to evaluate individual investment properties for traditional as well as Airbnb short term rentals. For each property, it estimates cap rates, cash on cash returns, and other key metrics every real estate investor needs to know when evaluating a potential investment property, including rental comps, vacancy, maintenance expenses, insurance, taxes, homeowners association dues, etc. We give you the best analysis you need to make smart investing decisions. The search tool also allows you to find investment properties using a heatmap of different areas across the US.
Once you’ve chosen a certain property, you are redirected to Mashvisor’s analytics, including a pro-forma income statement, analysis of the neighborhood, and comparable listings on external websites.
What Is a Heatmap?
In a nutshell, a heatmap is a visual summary of information, or a graphical representation of data where individual values contained in a matrix are represented as colors. It is a tool optimized to aggregate information and color coordinate key metrics as a visual representation.
How does a heatmap apply to finding an investment property, you may ask? To put it simply, when you want to make a more informed real estate investment decision, it is crucial to factor in all key real estate metrics, especially the cash on cash return.
Aggregating the data in a visual context can enable you to do the following:
1. Absorb information in new and more constructive ways
2. Find the information you need faster
3. Find correlations and see connections more effectively
Mashvisor’s Heatmap Tool
When it comes to finding an investment property, it is all about location, location, location. Location is a prerequisite to a profitable real estate investment. With Mashvisor’s heatmap tool, investors are able to identify prime locations for traditional and Airbnb real estate properties based on 4 key metrics: listing price, cash on cash return, rental income, and occupancy rate.
Related: How Can You Plan for the Best Cash on Cash Return?
Mashvisor’s heatmap tool is an effective way to pinpoint real estate money-making properties across all cities in the country. If you have a location in mind, the heatmap tool can give you reassurance of the location’s real estate potential. It is a great real estate investing tool and one that every investor must have for growing his/her real estate investment portfolio and profits.
Let’s say you want to find a new investment property based on high rental income and cash on cash return. With the heatmap, you can filter available properties based on these criteria and get an immediate visual feedback showing you the areas with high rental income and cash on cash return. This real estate investing tool eliminates hours of work and gives you a visual summary of the best locations for investing in real estate in an instant.
Mashvisor’s Heatmap Metrics
1. Listing price
You can find an investment property based on a specific listing price you have in mind. If you are sticking to a budget and want to search for investment properties within your financial constraint, you can easily filter the heatmap tool based on a specific listing price. This way, the heatmap visually shows all rental properties across different locations within your budget constraints.
2. Cash on cash return
Cash on cash return calculates the income you will earn from investing in a specific real estate property. A cash on cash return of 10% is considered a good benchmark. Of course, the higher the cash on cash return, the more profitable your investment property. It is worthy to mention that Mashvisor’s heatmap tool includes cash on cash return for both traditional and Airbnb properties.
How to calculate cash on cash return (CoC):
CoC = Cash on cash return = Net operating income/Total cash investment
Net operating income (NOI) = Annual rental income – Operating costs
Total cash investment = Total cash sum you paid to buy your investment property
To sum it up for you, prime locations reap the highest return on investment (ROI) and cash on cash return. Dallas, Texas and Jacksonville, Florida are amongst the hottest real estate markets in the country right now, harboring the highest cash on cash return.
3. Rental income
This one does not need much explaining because buying a rental property is all about having a steady positive cash flow every month. Rental income is the epitome of real estate investing and is essentially the real estate investor’s salary. This key metric is crucial to the heatmap and one that optimizes your search to find the right investment property based on real estate comps in prime locations. You, as a real estate investor, can easily find prime locations with the highest rental income via the heatmap tool, alongside Mashvisor’s Airbnb calculator, in a matter of seconds, and it works for both Airbnb and traditional rental properties.
Related: 4 Reasons to Invest in the Dallas Real Estate Market Right Now
4. Airbnb occupancy rate
You can also find Airbnb, aka short term rental properties, based on occupancy rates. The heatmap tool can decipher key areas with the highest occupancy rates for Airbnb properties only. Since rental income from Airbnb is on a per night basis as opposed to the traditional monthly rental income, there is a positive correlation between the Airbnb occupancy rate and the rental income. The higher the occupancy rate per month, the more rental income earned.
Conclusion
No wise decision was ever made on a whim. The same applies to real estate investing and finding an investment property with long term financial rewards. Studying the market is only one part of the equation, the major part entailing analytics and assessment. With Mashvisor, we cut your time in half and give you the best real estate investing tools to find a lucrative investment property with real time data in an instant.
Don’t believe us? Head over to Mashvisor and try it out for yourself. Happy investing!