Multi family homes are known to be the most popular types of properties for making money in real estate. Indeed, buying a multi family home can offer robust returns – if you’re buying a good property, that is. Savvy real estate investors know that analyzing any type of property investment is a must before making an offer. After all, you want to make sure the property will bring a good return on investment so you can invest your money with confidence. For a long time, most would use a multi family analysis spreadsheet to get this analysis done. But not anymore.
Times have changed since spreadsheets were created to help investors analyze rental properties for sale. Now, technology is integrated into the industry and real estate investment software has become the go-to for many investors. As a result, the once very useful tool real estate investment analysis spreadsheet essentially became obsolete. But what is the alternative?
Enter: The Multi Family Investment Calculator
As the name suggests, this tool is designed specifically to analyze multi family homes anywhere in the US housing market. The multi family investment calculator is an online tool that utilizes big property data, predictive analytics, and machine learning algorithms to conduct a rental property analysis. Instead of creating Excel spreadsheets, this tool will run all the numbers and ROI metrics and, ultimately, offers a projection of what kind of return you can expect from multi family homes for sale anywhere in the US housing market. So if you’re still using a multi family property analysis spreadsheet in 2020, we highly recommend reconsidering your approach.
Related: 3 Investment Property Search Tools to Find Multi Family Real Estate
You can get access to this must-have tool right here on Mashvisor. The multi family investment calculator (also known as the multi family deal analyzer) is one of the many tools we offer to help investors make faster and smarter decisions. Besides the fact that it provides data that you need for running a multi family investment analysis, Mashvisor’s investment property calculator is easy to use. Here’s what this tool does that a multi family analysis spreadsheet can’t do as efficiently:
#1 Calculates Property Expenses
The first step in conducting a multi family real estate investment analysis is calculating your costs and expenses. As you can imagine, buying multi family homes is not cheap. So, you need to know how much it’ll cost you to invest in the property to realize whether or not it makes financial sense. This is why the first thing that Mashvisor’s multi family investment calculator does is estimate all the costs and expenses for you.
It provides you with readily-calculated estimates of not only your one-time startup costs, but your recurring monthly expenses as well. These estimates are based on real estate data from actual properties in the area and publicly available data. What’s more, if you have your own estimates, you can adjust the numbers as you see fit. Our interactive real estate investment tool will then automatically re-recalculate the return on investment metrics for accurate results.
#2 Calculates Rental Income
The next thing that a multi family analysis spreadsheet can’t do is provide you with readily-calculated rental income estimates. When using an Excel spreadsheet, for example, you need to do your own market research to first find rental comps, gather data of how much they’re charging, then organize this data in the spreadsheet to get an estimation. With our calculator, on the other hand, all this work is done for you so get the final comparable rental income pre-calculated!
The comparable rental income is an important real estate metric as investors use it in computing other key metrics. And you can rest assured that our estimates are accurate as they’re based on a detailed neighborhood analysis and rental comps analysis. A unique feature of Mashvisor is that it’ll show you these estimates for the same multi family investment property whether rented out traditionally (as a long-term rental) or on Airbnb. This helps you decide the optimal rental strategy.
#3 Calculates Property Cash Flow
When investing in multi family properties, you need to ensure they generate positive cash flow. Cash flow is simply the difference between rental income and rental expenses. After getting these estimates, it becomes easy to do this next step of the multi family deal analysis. But you no longer need to do this calculation by hand or through a real estate investment analysis spreadsheet as Mashvisor’s deal analyzer will have it already done for you! This not only makes things easier, but also allows you to make sure the multi family homes for sale you’re interested in are cash flow properties. In other words, they bring passive income that goes into your pocket and helps you increases your return on investment.
Related: How to Find Positive Cash Flow Multi Family Homes
#4 Calculates Return on Investment
The main reason why an investor uses a multi family analysis spreadsheet is to ultimately get an idea of what ROI to expect. When using an Excel spreadsheet, you can’t always guarantee that the end result is accurate. This is not the case when using the multi family investment calculator! What’s more, Mashvisor’s calculator will estimate the two most important ROI metrics: the cash on cash return and the cap rate. Cash on cash return indicates the ROI you’ll receive for your actual dollar investment. On the other hand, the cap rate shows the ROI based on the rental income compared to the price of the property.
Both metrics are important to compare similar multi family homes for sale and quickly identify the most profitable one to invest in. In addition, just like all the metrics that the multi family deal analyzer estimates, you’ll be able to see the property’s both traditional and Airbnb ROI.
To start looking for and analyzing the best multi family homes in your city/neighborhood of choice, click here.
#5 Finds Real Estate Comps
While a multi family property analysis spreadsheet can help you organize comps, it won’t really help you in finding them. Real estate comps are properties that are similar to the one you plan to buy and which were recently sold in the same area. Finding real estate comps is an important step to run a comparative market analysis. This analysis allows real estate investors to make sure the multi family rental property is profitable and is worth the price. Performing a CMA will also help you set your pricing strategy accordingly. Instead of wasting time looking for comps or paying an agent to find them for you, Mashvisor will automatically generate them for every multi family real estate property on the platform.
Related: Comparative Market Analysis: A How-To Guide for Real Estate Investors
Why Stop Using a Multi Family Analysis Spreadsheet
As you can see, there are many benefits of using the multi family investment calculator instead of a multi family analysis spreadsheet. Here’s a simple breakdown of these benefits:
- It saves you the time and energy of crunching the numbers and analyzing the real estate data yourself. Meanwhile, with the investment analysis spreadsheet, you’ll have to spare extra time only to insert your own data and numbers.
- With the dynamic nature of the real estate market, it’s vital to have the ability to identify and respond to changes quickly. However, an Excel spreadsheet can’t handle real-time data change. Meaning, you have to continually update the numbers yourself.
- The range of information you get out of a multi family investment calculator is far beyond just numbers – it also talks facts. The real estate investment analysis spreadsheet, on the other hand, only deals with the numbers you give it.
- There are only basic error validation systems on Excel spreadsheets. So, unless you’re extra careful, it’s too easy for a mistake to slip by unnoticed which would lead you to make an investment decision based on inaccurate results. On the other hand, our calculator always guarantees an accurate multi family deal analysis.
The Bottom Line
Investing in multi family real estate is pretty challenging with all the data and numbers involved. However, now you know why you no longer need a multi family analysis spreadsheet and what the best alternative is. Mashvisor’s multi family investment calculator is, in fact, one of the best real estate investment tools out there. So whether you’re a beginner or an experienced investor thinking of buying a multi family home in the US, this tool is a must-have in 2020. If you’re ready to stop using the old-fashioned investment spreadsheets, sign up with Mashvisor to get access to all of our tools and property data.