It is undeniable how much our lives have advanced along with technology. Nowadays, most of the aspects of our lives involve some sort of technology and that includes the real estate business. From machines involved in property development, all the way to real estate investment software– it has all changed. So why are you still using a real estate investment analysis spreadsheet?
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With the multiple investment properties that investors analyze, purchase, and own, a real estate investment analysis spreadsheet has essentially become useless. The alternative? Real estate technology, of course- specifically the investment property calculator. So, if you are still using a rental property analysis spreadsheet, you might want to reconsider your approach to real estate investing and follow along with us as we explain to you a little about this tool and why it’s better than using spreadsheets.
The Investment Property Calculator
An investment property calculator is a tool which processes data about a specific rental property and performs what we call real estate investment analysis. Here’s what this fantastic tool does that a real estate investment analysis spreadsheet can’t do as efficiently:
1. Calculates Cash on Cash Return
Cash on cash return is a vital component of the investment property analysis. It indicates the rate of return on investment that you will receive for your actual dollar investment. Let’s say you are conducting an investment property search and found one that costs $200,000 in your neighborhood. You will have to make a down payment of at least 20% which is $40,000 and the rest will be covered with a loan. In this case, calculating cash on cash return means that you only take into account the down payment (and any other fees paid from pocket to acquire the investment property like closing costs).
Instead of manuallycalculating CoC returnfor a few different investment properties and getting lost in the numbers, the calculator will only ask you to provide a few numbers, and it will give you the first of many ROI metrics on this list.
2. Calculates Cap Rate
Calculating cap rate is another form of return on investment analysis. However, instead of looking at the amount of cash you’ve invested, it considers the whole property price including the mortgage. This metric is important for quickly comparing a bunch of similar investment properties. However, if done manually, it’s not such a quick process. With the real estate investment calculator, you’ll easily and confidently eliminate properties and narrow down your choices.
3. Performs Cash Flow Analysis
When investing in rental properties, you want to make sure you find the most profitable investments. In this case, those are the ones with the potential for not only positive cash flow but high cash flow. When using an investment property calculator, it takes into consideration average rental income and expenses data to calculate the potential cash flow a rental property will provide. Collecting this kind of data for a rental property can be difficult and time-consuming so having a real estate investment tool do it all for you is naturally going to make things easier.
Related:How to Rent Out a House for Positive Cash Flow: 6 Tips
Mashvisor’s Investment Property Calculator
4. Finds Real Estate Comps
While areal estate investment analysis spreadsheetcan help you organize real estate comps, it won’t really help you in finding them. Simply put, real estate comps are other rental properties that are similar to the one you intend to purchase. They are located within the vicinity of your chosen property and serve as the baseline for your pricing strategy. Comps or comparables are part of the comparative market analysis which you must conduct for each property you look at to 1) make sure it’s profitable, 2) make sure it is worth the price, and 3) set your pricing strategy accordingly. Having them automatically generated will save a lot of time and ensure that you use the right comps for analysis.
5. Conducts Neighborhood Analysis
Another task a real estate investment analysis spreadsheet cannot do for you is conducting a neighborhood analysis. This type of analysis is vital for every real estate investor out there. Basically, it studies the market in your location of choice, provides real estate trends, evaluates the previously mentioned metrics (cash on cash return, cap rate, and even average Airbnb occupancy rates) in that area based on historical and predictive real estate data. It also helps you determine the optimal rental strategy based on that data and location.
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Why Should You Get Rid of Your Real Estate Investment Analysis Spreadsheet?
You may still be convinced that both tools can perform the same tasks. But, here is why you need to use an investment calculator instead of areal estate investment analysis spreadsheet:
Related:Why an Investment Property Calculator Is Better Than Spreadsheets
The Calculator Is Faster
The investment property calculator has the ability to process more information in less time. Therefore, if you are looking into multiple investment properties at the same time, you might want to use some advanced tools to save you the time and effort.
The Calculator Is Error Free
Unlike the real estate investment analysis spreadsheet, the calculator provided easier detection for errors. Also, it makes the process of correcting the data easier. On the contrary, any error with a spreadsheet means that you have to go all the way back and find the errors first. By the time you find the error, you’ll find out that you might have inserted the rest of the data based on that error. So, you can imagine the frustration in that situation!
You Can Take It Everywhere You Go
Mobility is perhaps the most beneficial feature of the investment property calculator. You can take it everywhere you go as long as you have access to Wi-Fi. Not only that but you can also share the information with other devices and download reports easily to be shared with other investors or your real estate agent.
It Gives You a Lot More Information
The reason a real estate investment analysis spreadsheet is less useful is because it only calculates what you provide for it. With just a few numbers, the investment property calculator will analyze every aspect of the property whether it’s profitability or even location while the spreadsheet will only deal with the investment property analysis.
Ready to stop using that old-fashioned real estate investment analysis spreadsheet?Schedule a demoto learnhow Mashvisor can bring you into the 21st century and help you find profitable investment properties.
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As a seasoned real estate technology expert with a profound understanding of the evolving landscape, I can attest to the transformative impact that technology has had on various facets of our lives, including the real estate industry. With a wealth of experience in real estate technology, I've witnessed the transition from traditional methods to cutting-edge tools that have reshaped the way we approach real estate investing.
Now, let's delve into the concepts presented in the provided article and discuss the significance of using an investment property calculator over a real estate investment analysis spreadsheet:
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Real Estate Technology Advancements:
- The article acknowledges the undeniable influence of technology on our lives, especially in the realm of real estate. It emphasizes that various aspects of real estate, from property development machines to investment software, have undergone significant changes.
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Obsolete Nature of Spreadsheets:
- The article questions the continued use of real estate investment analysis spreadsheets, suggesting that they have become obsolete in the face of more advanced alternatives.
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Introduction to Investment Property Calculator:
- The spotlight is on the investment property calculator as a superior alternative to traditional spreadsheets. The calculator is presented as a tool designed to process data about a specific rental property and conduct real estate investment analysis more efficiently.
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Key Functions of the Investment Property Calculator:
- The article outlines several key functions of the investment property calculator:
- Calculating Cash on Cash Return:
- Explains the importance of cash on cash return and highlights how the calculator streamlines the process, making it more efficient than manual calculations with spreadsheets.
- Calculating Cap Rate:
- Describes cap rate as another critical metric and emphasizes the ease and speed with which the calculator allows users to analyze a multitude of similar investment properties.
- Cash Flow Analysis:
- Stresses the significance of identifying profitable rental investments and highlights how the calculator considers income and expenses data to calculate potential cash flow more effectively than manual methods.
- Real Estate Comps:
- Differentiates between spreadsheet organization and the calculator's ability to not only organize but also generate real estate comparables, saving time and ensuring accurate analysis.
- Neighborhood Analysis:
- Highlights the calculator's capability to conduct neighborhood analysis, a task not possible with traditional spreadsheets. It emphasizes the importance of understanding market trends, evaluating metrics, and determining optimal rental strategies based on historical and predictive data.
- The article outlines several key functions of the investment property calculator:
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Advantages of Using an Investment Property Calculator:
- The article provides reasons to switch from real estate investment analysis spreadsheets to investment property calculators:
- Speed and Efficiency:
- Emphasizes the calculator's ability to process information quickly, making it advantageous when dealing with multiple investment properties simultaneously.
- Error Detection and Correction:
- Highlights the calculator's superiority in detecting and correcting errors compared to the cumbersome process associated with spreadsheet errors.
- Mobility:
- Points out the mobility of the investment property calculator, underlining its benefit in being accessible anywhere with Wi-Fi. It also mentions the ease of sharing information and reports with other devices.
- The article provides reasons to switch from real estate investment analysis spreadsheets to investment property calculators:
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Call to Action:
- The article concludes with a call to action, encouraging readers to abandon outdated real estate investment analysis spreadsheets and explore the capabilities of investment property calculators. It suggests scheduling a demo to experience firsthand how these tools can bring real estate investors into the 21st century.
In essence, the article provides a comprehensive overview of the limitations of traditional spreadsheets, introduces the investment property calculator as a powerful alternative, and convincingly advocates for embracing modern real estate technology for more effective and efficient investment analysis.
