Finding reliable real estate market data is crucial to your investment. Verify your sources well and only use accurate and updated information.
Real estate is one of the most lucrative investment vehicles available. It provides a hedge against inflation and doesn’t have the same volatility as the stock market. However, not all people investing in real estate become successful. Such type of investment can be very tricky; that’s why proper research is necessary to become a profitable real estate investor.
Table of Contents
- Challenges of Investing in Real Estate in 2023
- Real Estate Market Data Investors Should Know
- The Best Source of Real Estate Market Data
Access to accurate and reliable real estate data is essential to every investor’s success. Additionally, knowing how to use and analyze the data is equally critical because it can help investors make informed decisions. The problem is that not all investors know where to get up-to-date real estate market data, and most don’t know how to use the data available to them.
Fortunately, however, with the availability of online technology, investors can now easily access to real estate market data and trends. There are online resources that you can use to get the information you need. However, you need to be cautious when choosing your resources because not all real estate platforms provide accurate and updated information.
When choosing a real estate resource, make sure to put your trust only in tested and proven providers, like Mashvisor. Mashvisor is a known real estate analytics platform that provides precise and verified information about several real estate markets across the US. Plus, it also offers comprehensive analysis to help investors make the right investment decision.
Challenges of Investing in Real Estate in 2023
The past couple of years, especially during the height of the pandemic, can be considered (ironically) the best years for real estate. Demands from both homebuyers and investors surged while inventories were thinning out. It caused real estate prices to shoot up. However, despite the continuously increasing home prices, demands from buyers still continue to rise.
The low interest rates during the pandemic are one of the major drivers of the demand for real estate. Add it to the fact that the new work-from-home setup encouraged many people to move from big and expensive US cities. They relocated to suburban areas and some US cities with favorable taxes, like various locations in Florida.
During the middle of the pandemic, when lockdowns and travel restrictions were slowly being lifted, eager vacation-goers saturated the short term rental market. Because of the sudden surge in demand for short term rentals, many investors were buying short term rentals for sale to take advantage of the opportunity. It is another factor that drove the US real estate market.
The question now is whether we will see the same real estate trends for 2023. Experts believe that the real estate market will change starting next year. And while the market will continue to be warm, it may not be as hot as it used to be for the past couple of years, especially during the pandemic’s peak.
Below are three challenges that real estate investors will most likely see in 2023:
1. Interest Rates Will Continue to Rise
Since the middle of this year, interest rates have been rising. In fact, interest rates are almost doubling, and there’s no sign that they are going to slow down anytime soon. The surging interest rates can be attributed to unabated US inflation, geopolitical tensions, and a potential recession. As a result, loan providers will also increase the mortgage rates, which ultimately slows the demand for housing.
The rising interest rates may cause home prices to drop, which is a good thing for cash buyers. However, the drop in home prices is not guaranteed. If you’re an investor, it’s best to look for rental properties for sale in US cities with relatively low home prices. But you also need to be sure that there is sufficient demand for rentals in the area that you choose to invest in.
The good news is that, since the high cost of borrowing money makes it more impossible for buyers to find a home that they can afford, we can anticipate an increased demand for rentals. Many residents would find renting a home a more practical option than buying one. It means that there will be more opportunities for rental property investors.
Related: Mortgage Rates: The Real Estate Investor’s Complete Guide
2. Inventory Remains Low
Although some real estate experts are expecting an increase in housing inventory in 2023, it will just be a slight improvement, and the total inventory is expected to remain relatively low. It means that investors might still find it difficult to find the best investment property in the area in which they want to invest in. Also, if the inventory is low, housing prices will most likely be high.
While most housing predictions in 2023 believe that the market will shift into a buyers’ market, chances are home prices will remain high if the inventory will not be able to keep up. As a result, many investors will experience difficulties in finding a rental property to invest in. With increasing interest rates and high home prices, the chances of finding an affordable property remain slim.
3. The Competition Is Getting More Challenging
Since there are plenty of investors who ventured into real estate during the pandemic, the competition is getting bigger in some markets. For instance, in some famous tourist destinations in the US, there are numerous short term rental properties available. If you own a vacation rental property in a saturated short term rental market, it could be quite a challenge.
As a rental property owner, you need to know how to make your property stand out among the competition. To avoid such a problem, you must know where to invest before buying an investment property. Keep in mind that not all locations in the US are optimal for real estate investing. This is where real estate market data becomes useful.
Real Estate Market Data Investors Should Know
Every real estate investor should know the important metrics to look into when evaluating an investment property. This allows you to determine which properties are ideal for rentals and which will most likely generate the highest profits. As investors, you should not buy a property just because it is cheap or it is located near where you live.
By knowing the important real estate market data and conducting a comprehensive analysis, you’ll be able to identify potential investment properties that will make you a profitable investor. When doing your research, make sure to look for the following real estate data as it can help you make a thorough rental property analysis.
1. Rental Income
Before you buy a particular rental property, you need to find how much income it can possibly generate in a month depending on your preferred rental strategy. Note that the income a property generates when it is used as a long term rental is different from the income it can generate when used as a short term rental.
The rental income data should come from accurate sources, based on the actual income the property generates and the comparable rental listings within the same area. Knowing the rental income data can help you decide whether or not you will earn enough to make you a profitable rental property owner.
2. Expenses
The cost of acquiring the property, as well as its recurring monthly expenses, should be considered when you’re looking for a profitable investment property to buy. It’s important to find out how much you will most likely spend for owning the property. The property’s expense data will signfiicantly affect your overall profitability.
When researching the expenses of a property, make sure to include the one-time costs, such as closing costs, repairs costs, inspection fees, and furniture and appliances. Of course, you also need to find out the costs of operating the rental property, including insurance, utilities, property management fees, maintenance, taxes, and other charges like HOA fees or condo dues.
3. Cash Flow
The cash flow is the inflow and outflow of the cash in a business. It’s the amount of cash that’s left from your income after all the expenses are deducted. A property with positive cash flow means you’ll have more cash left as profits. As an investor, you should not only aim for a positive cash flow. Your goal is to find a property that can generate high positive cash flows.
You can find the cash flow of a particular rental property by manually calculating the figure using the income and expenses data that you got. However, there are some real estate data and analytics providers that offer access to a rental property cash flow calculator. The calculator allows you to calculate a property’s cash flow based on accurate data provided.
4. Cap Rate
Many investors are wondering what is cap rate and how it can help them find the best investment property to be used as a rental. In general, cap rate is a rate of measure used to determine the return on investment of a property regardless of the financing method used to acquire it. The real estate metric is essential if you want to find which property is profitable.
A property’s cap rate takes into account the value of the property. It doesn’t matter how much actual cash you initially invested in the property. To calculate the cap rate, you need to divide the net operating income by the property’s value (including the purchase price and any improvement). You can also use an online cap rate calculator to get an accurate figure.
5. Cash on Cash Return
The cash on cash return is another real estate market data used to determine the potential return on investment an income property can generate. Unlike the cap rate, however, cash on cash return’s calculation only takes into account the actual cash invested, not the total value of the property. It is the ratio of annual pre-tax cash flow to your total cash investment.
It means that the value of cash on cash return will vary based on whether you acquire the property through cash or a loan. If you plan to purchase the property through a mortgage, the cash on cash return calculation will also be based on how much down payment you put. Some real estate analytics providers also offer access to cash on cash return calculator online.
6. Occupancy Rate
Vacancies are something that many rental property owners dread. When a property is vacant, it means the investment property does not generate income. That’s why when it comes to finding the best investment property to buy, you must find out the occupancy rate data first to help you make the right decision.
A short term rental property’s occupancy rate determines the number of days the property is being rented versus the number of days they are listed for rent. For long term rentals, on the other hand, occupancy rate refers to the number of days the property is being rented by tenants in a year. The higher the occupancy rate is, the better for rental property owners.
7. Rental Comps
Another important real estate market data that you should find when looking for the right investment property to buy is the rental comps or neighborhood comps. Rental comps are real estate data that refer to similar rental properties within the same neighborhood. The best rental comps are those that share almost similar features and sizes with your subject property.
By looking at the rental comps, you’ll be able to create an analysis of how a particular property will perform based on your chosen investment strategy. You can also see how your competitors perform in the market. From there, you can make an analysis of what’s missing and what can be improved so that you can make your property stand out among the competition.
Related: What Are Real Estate Comps and Why Are They Important for Real Estate Investors?
The Best Source of Real Estate Market Data
While there are many real estate market data providers available online, not all of them offer accurate information about several real estate properties across the US. When looking for potential providers of real estate data, make sure to check how reliable and trustworthy they are. Will they present the data in a way that both seasoned and new investors can understand?
The best source for real estate market data also provides a thorough analytics report that is understandable to both new and experienced investors. It is why Mashvisor is the most preferred platform when it comes to real estate data and analytics. Mashvisor’s platform is generally easy to understand, and it provides the complete data and analysis that you need.
What’s great about the Mashvisor platform is that it features a number of real estate tools that are useful for finding the best and most profitable investment property in your chosen zip code. If you choose Mashvisor as your real estate market data provider, you can access the following features:
Investment Property Search
Mashvisor’s investment property search feature allows you to find the right income property by zip code. The platform makes it easier for you to search for a perfect match based on the criteria that you set. Mashvisor allows you to customize your filters so that the results are automatically narrowed down to what you’re looking for.
To find the perfect rental property, you only need to enter the state, city, neighborhood, or zip code of your choice. You can set your custom filters like budget, cash on cash return, cap rate, number of bedrooms and bathrooms, property type, size, rental income, and even the property’s construction year. This way, the results are customized to what you want to see.
Heatmap
The heatmap is another Mashvisor real estate investment tool that allows you to find top-performing real estate investment properties in your chosen neighborhood. The best thing about the heatmap tool is that it doesn’t just use numerical data, but it also incorporates color-coding methods to distinguish a location that meets your criteria easily.
The real estate heatmap allows you to modify your search results according to your preference. You can set your preferred listing price, rental income, cash on cash return, and short term rental occupancy rate. The map will then highlight certain areas with colors from green to red. The green areas are the high-performing ones, and the reds are the less desirable areas.
Related: How Mashvisor’s Heatmap Can Point You to Low Housing Market Prices
Mashvisor’s real estate heatmap enables you to find top-performing real estate investment properties in your chosen neighborhood.
Property Valuation Analytics
When you click a property from the results, you will then land on a page where you will see all the necessary real estate market data and analytics that can help you determine its profitability. Mashvisor provides all the information and property details that you’ll need, including its income, expenses, cash flow, cap rate, cash on cash return, and occupancy rate.
You can trust that the above information comes from reliable sources, so only accurate figures are included in the valuation analysis. What’s more, you will see an overview of the comparable returns based on two rental strategies: long term or short term rental. It allows you to compare which investment strategy is best for that particular property.
Investment Property Calculator
Another excellent Mashvisor tool is its investment property calculator. Others refer to the tool as rental calculator, which allows you to estimate how much you can potentially earn from an investment property based on the provided expense figures. What’s best about the tool is that it is interactive, which means it allows you to edit the expenses and add your custom costs so that you’ll get a more personalized computation.
What’s more, you can also factor in the method of financing that you’ll use. For instance, if you plan to purchase the property through a mortgage loan, you can edit the financing calculator and input your figures. You can set your down payment, mortgage type, interest rate, and loan terms, so you’ll know how much exactly you’ll spend for the mortgage.
Mashvisor’s investment property calculator lets you estimate the profitability of an investment property based on the provided expenses and costs.
Neighborhood Analytics
Another essential real estate market data that you can access when you choose Mashvisor is neighborhood analytics. The analytics tool provides relevant property data, such as the Mashmeter, which is a dynamic score that predicts the market’s future investment return.
In addition, you will also access several rent analysis reports. The reports include the breakdown of rental property types in the neighborhood, as well as the occupancy rate by rental size and rental size distribution. Moreover, you can also obtain occupancy rate stats, rental income stats, historical occupancy rates, and historical rental income data.
Are you ready to find the best investment property? Sign up for a 7-day free trial now.
Find Accurate Real Estate Market Data Using Mashvisor
Finding accurate real estate market data is an essential step before you buy a rental property. To ensure that your real estate investment becomes successful, you need to study the market and conduct a thorough analysis first. However, since the accuracy of real estate data is crucial in making the right investment decision, you need to be careful in choosing your sources.
As mentioned, the best source for finding accurate and up-to-date real estate market data is Mashvisor. When you use Mashvisor, you will no longer need to do any manual calculations because everything is provided for you. Its interactive rental income calculator makes it easier for you to distinguish investment properties that are optimal for your chosen rental strategy.
As a real estate investor, you need access to a variety of information that allows you to identify the best investment properties in your chosen location. What’s best about Mashvisor is that its investment property search tool allows you to search for properties by zip code easily. What’s more, you can also filter your search results based on your preferred criteria.
On top of that, Mashvisor’s comprehensive analytics report makes it easy for both new and seasoned investors to understand the real estate data being presented. Through this, investors can make an informed investment decision based on accurate and verified figures.
Get your hands on Mashvisor’s real estate investment today. Schedule a free demo now.