How to Buy a Profitable Rental Property in a Top Market

September 17, 2018 in Guest Posts, Landlords and Tenants

 

buy a profitable rental

 

I have a guest post for you today on how to buy a profitable rental property in a top market. Thanks to Daniella Andreevska of Mashvisor for this article and the resources she shared.

 

How to Buy a Profitable Rental Property in a Top Market

Investing in real estate is an exciting and profitable business endeavor which starts with buying a good property in a top performing market. This process which used to take weeks and even months of research, data collection, and calculations has now been reduced to a few minutes with the advancement of technology into the real estate industry. Predictive analytics, a fancy term for using historical data to make predictions about the future performance of rental properties, allows investors to find and buy positive cash flow properties in any market before other investors get a hold of them.

The process of buying an investment property can be broken down into three main parts: 1) Choosing the best market; 2) Finding the best property within this market; and 3) Selecting the optimal rental strategy for this property. Mashvisor, an advanced real estate analytics tool, helps you out in each of these steps. Here is how.

 

Find the Best Market to Own a Rental Property

One of the greatest things about investing in the US housing market is the endless options which you have. Buying a rental property in Miami, FL will give you a totally different experience – and return on investment – from buying a rental property in Chester, VT.

However, this diversity can also be confusing and even intimidating for beginner real estate investors who do not have experience in market research.

If you are thinking of starting investing in real estate, you must have already heard that location is the most important factor for the success of your rental business. But this does not give you the answer to the question: “How do you find the best place to invest in real estate?”

Mashvisor does.

Mashvisor has eliminated the need to spend weeks reading about the top rental markets in the US, the average property prices there, and the rental income you can make in order to decide where to invest. Instead, the platform helps you find the best city and the best neighborhood in this city for rental properties.

For example, one of the most popular features of Mashvisor is the heatmap. As soon as you input a city of interest to you, the heatmap will show you which neighborhoods to focus on based on a number of different criteria:

  • Property price
  • Rental income
  • Cash on cash return
  • Occupancy rate

 

Find the Best Property in Your Market

Once you have decided on a location, your job is half done, but you still have to find a property which will fit your budget, generate high rental income, and yield positive cash flow. Here is where real estate market analysis, or comparative market analysis (CMA), comes into play. This means finding 3-5 real estate comps, or properties with similar features to the one you are looking to buy which have sold within the past 3 months. The purpose is to find how much you should expect to pay for the property which you want to buy in order not to pay too much. This analysis alone can take many weeks as you struggle to find comparable properties and the prices for which they sold.

Afterwards, you still have to figure out how much rent to charge for the property you are about to buy so that you are a competitive landlord while not charging too little and missing out on making all the profit you can.

Mashvisor’s rental property calculator, though, eliminates the need to conduct real estate market analysis – and even investment property analysis – by providing you with readily available calculations on:

  • Property price
  • One-time startup costs
  • Recurrent expenses
  • Rental income
  • Cash flow
  • Cash on cash return
  • Cap rate
  • Occupancy rate

for MLS properties for sale available in your market of interest. Since all data and calculations are presented in a user-friendly, easy-to-understand manner, they are accessible for first-time investors as well as for experienced investors and even real estate agents working with investors.

Another tool which will help you identify the most suitable for you and most profitable property in your market or markets of choice is the property finder. The properties which this tool will offer you will not only boast the highest return on investment but also match your preferences and personal situation most closely.

 

Determine the Optimal Rental Strategy

Your rental strategy is as important as the location of your rental and the actual property. You might have the perfect property in the best place but renting it out in the wrong manner.

Mashvisor will help you determine the optimal rental strategy for your neighborhood and for your property by showing you all the metrics of profitability for both traditional and short-term rentals. In this way, you can easily decide whether it makes more financial sense to rent out your property on short-term or long-term basis.

Of course, this information can be used the other way around too. If you know which rental strategy you want to go for, you can set your preferences accordingly in order to find the most appropriate property for this particular method of renting out in any market.

The real estate investing business is a great way to make money as it is less risky than other investments, does not require too much cash to start out, and does not entail specialized knowledge. As long as you have the right investment tools in your hands, you are set to succeed.

 

About Daniela

Daniella AndreevskaDaniela Andreevska is Content Marketing Director far Mashvisor, a real estate analytics tool which helps real estate investors quickly find traditional and Airbnb investment properties. A research process that usually takes 3 months can now take 15 minutes. We provide all the real estate information in easy to understand visualizations.

 

 

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