Investing in a rental property is an excellent way to fortify your financial future, but this is only true if your property generates profit. While this may be a simple concept, determining a property’s profitability is complicated, and failing to do your due diligence can have dire consequences. Fortunately, the short-term rental data provided by a premier rental property calculator like mbanc Invest can help forecast profitability and turn your investment from a gamble into a sure thing. Here’s how it can help:
An essential piece of short-term rental analytics that will help determine if a prospective investment property will be profitable is neighborhood analysis.
Ultimately, location is the end-all-be-all for real estate, so the importance of selecting the right area cannot be understated. Analyzing a neighborhood for profitability is complicated, but researching the neighborhood is key to a prudent investment decision.
Crucial variables to consider when homing in on profitable properties and neighborhoods during this analysis include the:
- Local amenities
- Job market
- Plans for future development
- Crime rate
- Ratio of renters to homeowners
- Appreciation vs. depreciation
- Property tax
- Rental demand
- Occupancy rates
- Vacancy rates
- Types/income of local renters
- Average monthly rental income
- Projected return on investment
- Size of nearby properties (single-family or multi-family)
- Local foreclosures
- Climate and weather
- Percentage of renter-occupied households
- And more
Still, this is just scratching the surface. Moreover, calculating all the necessary metrics, interpreting them, and forecasting developments are nearly impossible to do without considerable experience and extensive training. That is, until now.
Using a premier rental property calculator like mbanc Invest, you gain access to predictive analytics that empower you to master your market by streamlining this analysis.
A Comparative Market Analysis
Another component of determining whether or not a prospective property will be profitable is conducting a comparative market analysis (CMA).
In real estate, this is a fundamental concept and practice that requires analyzing short-term rental data. To conduct a CMA, you must find similar properties to the one you are considering purchasing. Ensure they are no more than a couple of miles away.
Also, we advise ensuring that sales occurred within the past few weeks for the most accurate estimate. Carefully research what other people are paying for similar properties to ensure you are not overpaying and setting the right price.
Alternatively, this is also a good way to determine if you are getting a bargain. Finding comparable profits for a CMA can be difficult. Fortunately, using a preeminent rental property calculator like mbanc Invest makes this easier than ever.
Using this innovative tool, you can gain instant access to essential data from any market or property in the country to make the most informed decisions and gain an advantage.
Investment Property Analysis
Finally, to gain an insight into how profitable a rental property will be, you must analyze the property itself. Some determinants are less technical, such as a property’s:
- Price (and, consequently, mortgage payments)
A property you have to renovate delays cash flow but could enable you to charge a higher price and realize more income in the long run, while a move-in-ready property can generate income virtually immediately.
We advise working with a professional to assess things like water damage, windows and doors, wiring and electrics, local regulations, and more. Still, there are some key metrics to keep in mind that will determine the profitability of a property, like the:
- Monthly rental income
- Cash-on-cash return
- Cap. rate
- Occupancy rate
- Recurring costs
- One-time startup costs
- Operating expenses
- And more
Innumerable metrics determine how profitable an investment property will be, but calculating them is nearly impossible without specialized training. Luckily, cutting-edge rental property calculators like mbanc Invest make this faster and simpler than ever.
Talk with Our Team to Learn More About our Rental Property Calculator to Find the Most Profitable Investments
Investing in a rental property is a great step toward future financial security. However, there is a caveat you must consider: this is only true if you can ensure this property will be profitable. Failing to do the necessary research and analyze the relevant short-term rental analytics will, in the end, do more harm than good. Fortunately, innovative rental property estimators like mbanc Invest take the guesswork out of investing and give you an incontrovertible advantage over the competition.
To instantly access all the metrics you need to calculate a property’s profitability, talk with our team today to learn more about our estimator and the mbanc Advantage.