Successful investors are aware of how crucial real estate data analytics are in any investment. But how does it affect real estate investing?
Investing in real estate properties is a numbers game. It goes beyond just getting the best deals on an investment property. Successful investors factor in all the different variables that exist within a certain market as well as current trends. In this case, real estate data analytics could mean the difference between investment success and failure.
Table of Contents
- So, What Exactly Is Real Estate Data Analytics?
- 4 Types of Real Estate Data Analytics
- 6 Ways to Use Real Estate Data Analytics
- Where to Find the Best Real Estate Data Analytics Tool
For a long time, real estate investing was driven solely by speculation, educated guesses, and gut feeling. As a result, many investors kept making the same mistakes over and over again.
While the element of risk cannot be completely eliminated, using real estate data analytics allows people to make more informed decisions about the most profitable investments, thus significantly minimizing their risk.
Nowadays, more and more real estate investors are turning to a data-driven real estate market analysis to build wealth and improve their competitive advantage.
In this article, we will walk you through the basics of real estate data analytics and how it can help you become a wiser and more informed investor. We will also talk about where to find the right tools that will make data and investment property analysis a lot easier and more efficient.
So, What Exactly Is Real Estate Data Analytics?
Investing in real estate requires a lot of hard work. And a big part of that has to do with analyzing real estate market data and dealing with numbers. In general, real estate data analytics play a major role in the success (or failure) of a real estate investing venture.
Real estate data analytics is the process of examining raw data with the help of real estate software. It aims to help investors like you make a more informed conclusion on the information and data they contain. This analysis is usually done with the aid of specialized systems and software for real estate investors.
Big data can be compiled from census figures, public or government databases, business or consumer surveys, or other online sources. Data analytics can help real estate professionals enhance operational efficiency, increase revenues, improve customer service efforts, optimize marketing campaigns, and respond faster to emerging market trends.
Real estate data analytics can be used on any type of real estate investment, so whether you’re in the market for residential properties or commercial real estate for companies and businesses, you can apply real estate data analytics to your own investment journey.
There are numerous paid and free academic courses out there offered by different sites and companies that beginner and experienced investors can use to learn data analytic skills for finding the best investment properties.
4 Types of Real Estate Data Analytics
There are different types of real estate data analytics. Depending on your need, you can use any one of these to come up with more accurate estimates and projections on the subject properties of your choice.
Descriptive Analytics
This kind of data analytics describes what happened over a specific duration (i.e. real estate trends).
For example, how much has rental income increased in the past five years? What was the vacancy rate in the past year? Descriptive analytics looks at data from a wide range of sources to derive useful insights into the past.
Diagnostic Analytics
Here, historical data is examined to explain why something happened. For example, diagnostic analysis can dig deep to reveal why rental properties have a high turnover rate in a specific real estate market.
Predictive Analytics
Just as the name suggests, predictive real estate data analytics forecasts what might happen in the future. It uses information from diagnostic and descriptive analytics to identify clusters, exceptions, and tendencies to make a housing market forecast.
For example, an investor can use real estate predictive analytics to forecast how big rental rates will be in the next two years.
Prescriptive Analytics
The main aim of this analysis is to prescribe what needs to be done to take advantage of an opportunity or avoid a problem in the future.
For example, let’s say someone wants to invest in an Airbnb property. Should they purchase a home with two, three, or four bedrooms? How many bathrooms should it have?
Prescriptive Airbnb analytics will help figure out what needs to be done to boost occupancy rates, thus ensuring positive cash flow in the future.
Use our free Airbnb calculator to estimate the potential Airbnb rental income of a specific property in the US.
However, this kind of analysis uses modern technologies, software, and real estate investment tools like algorithms, business rules, and machine learning, thus making it difficult for individuals and some companies to implement and manage.
6 Ways to Use Real Estate Data Analytics
Now that we’ve talked about some of the basics of real estate data analytics, let’s talk about how it benefits real estate investors. Data analytics can be a powerful tool in your investing arsenal if you use it properly. It can spell the difference between investment success and failure.
That being said, there are several ways that you can use this knowledge to your advantage and get a good return on investment and generate a positive cash flow. This will ultimately lead to generating a steady flow of passive income, which can put you in a better financial position.
The following are six ways investors can get rich in real estate using data analytics:
1. Location
Data analytics offer important insights into the current trends in real estate investment. Investors can analyze locations based on variables such as traffic congestion, school ratings, life quality, and crime rates.
Additionally, real estate data can help an investor determine how profitable a location will be in terms of occupancy rates, average rental income, and even the ROI of the area.
Being able to identify the best locations quickly allows investors to stay one step ahead of the competition in finding rental properties. It also saves them the trouble of carrying out lengthy searches using traditional research methods.
Learn more about how we can help you choose the right investment location using data.
2. Pricing
Whether an investor is looking to sell or buy, price optimization is crucial for making money in real estate. Real estate investors need to understand the market they are operating within in order to make the best pricing decisions. However, pricing data analytics is not just restricted to selling and buying prices.
It can also be applied to other facets of real estate, such as pricing of rates and taxes, rental data and statistics, pricing of services, and building prices.
3. Faster and More Accurate Appraisals
Getting an appraisal is very crucial before buying or selling an investment property. Depending on your data source, real estate data analytics provides a large amount of accurate information about sales for comparable properties in the same area. Investment property analysis makes it easy for valuators to offer price estimations quickly to real estate investors.
4. Commercial Trends
Commercial real estate investment is usually more large-scale and complex than residential property investment. Therefore, investing successfully in commercial property requires in-depth real estate data analytics on consumer trends.
What are consumers looking for? Who are the competitors in the industry? Is there enough demand for a new shopping mall? What about other smaller companies and medium enterprises? Are parents looking for new schools? Is there a shortage of restaurants?
Real estate data analytics will answer such questions and help investors make more informed decisions.
5. Competition Analysis
Real estate data analytics can help investors review the performance of their competitors in the real estate business.
Who is selling the most? Which companies are considered the most trustworthy? What customer rating do they have? What marketing strategies are they using?
Investors can also use data analytics for profits, sales figures, and consumer reviews to evaluate their own performance.
6. Tenant Targeting
Using predictive real estate data analytics, investors can determine who their tenants will be in the coming years.
Is there a consistent demand for rental units in the neighborhood? Will the property have tenants in the next two to three years? How will the composition of tenants change in the next five years? What target group should the landlord focus on (single professionals, young families, college students, etc)?
Such data analysis makes it easier for investors to target their advertising appropriately.
Where to Find the Best Real Estate Data Analytics Tool
To get the most accurate results with your real estate data analytics, you will need to have access to the best data and tools available. While there are plenty of websites that offer real estate data analysis, not all of them have the high-quality data needed to make realistic estimates and projections.
Enter Mashvisor.
Mashvisor is a real estate platform that specializes in investment property searches. Countless investors have found the right investment properties that meet their needs using Mashvisor.
Real Estate Database
As a real estate platform, Mashvisor offers its users access to an incredibly huge database that covers almost every corner of the US housing market. It draws its data from highly reliable sources such as Zillow, Realtor.com, Airbnb, and the MLS. It also regularly updates its database to ensure that users have access to relevant information all the time.
Property Search
On top of that, Mashvisor also makes the search for investment properties a lot easier with its property search tool. Simply enter the address, neighborhood, city, or zip code of your choice and click on the Start Analyzing button on the home page.
It will then take you to a page showing a map of the area dotted with pins representing all active listings. Click on any pin to read about the property details.
Real Estate Heatmap
The map also serves as a real estate heatmap when you turn on the filters in the pulldown menu in the upper left corner.
Depending on which filter you choose, you will see different versions of the map that have patches of greens, yellows, oranges, and reds. These colors represent how each area is performing according to the chosen filter. Greens show areas that are doing really well, while the red patches indicate areas performing poorly.
Investment Property Calculator
Lastly, Mashvisor also makes crunching the numbers a lot easier, especially for those who dislike math. Its investment property calculator helps you make fairly accurate and realistic computations based on the current data Mashvisor has.
The calculator is also highly interactive and intuitive, as you can customize your calculations and input data based on your own research. The system will then automatically adjust the numbers based on your input to give you better results.
To get access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.
Conclusion
Real estate markets are volatile, complicated, and always changing. Therefore, buyers and sellers in the housing market need real estate data analytics in order to make wise investment choices and maximize their return on investment.
With data analysis, investors can objectively evaluate where and when to invest, as well as determine the accurate value of properties. Metrics such as desirability analytics, market cycle risks, and price forecasts are very important in such analytics.
To ensure you only get highly accurate and realistic estimates and projections, we recommend using Mashvisor for real estate data analysis. It offers users high-quality data to get better results. Its real estate investing tools also make the entire process of property search and investment property analysis a lot easier and more efficient.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.