The Most Important Asset of a Real Estate Investor

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The Most Important Asset of a Real Estate Investor

Group of people reviewing data.
Photo by boonchoke – Shutterstock.com

Many would argue that the single most important tool in an investor’s arsenal is data analysis. Without it, even loaded investors can’t hope to survive in the current economic climate. Data analysis points us in the right direction depending on our needs, our current portfolios, and our interests so it’s safe to say that without it, we’d be flying solo.

Consider this. You have a bag full of cash that you’re ready to invest with. You have three sectors in front of you. How do you know which one to pick? Naturally, you’ll need to consider different factors first.

For example, will you be entering an over-saturated market? Data analysis will show you how many investors there are in a specific market and how much money they’re making. Still wet behind the ears investors might jump on the bandwagon, but seasoned individuals will know better.

The data will also show you exactly which markets are ripe for investing. By analyzing current and past trends you’ll have a better idea of where to dive in and which sectors or businesses you should avoid.

All in all, without the numbers you can’t make an educated guess- and that’s exactly what you’ll need if you’re interested in maximizing and diversifying your portfolio. So, with that in mind, let’s look at how you should use this data in order to become rich in real estate investments!

Automated Valuation

Zillow website.
Photo by Casimiro PT – Shutterstock.com

Nowadays you couldn’t estimate home values on your own even if you tried. Sure, you could give it a go, but we guarantee you’ll be way off. That’s where the Automated Valuation Models comes into play, and it’s nothing to scoff at as major real estate organizations use it on a daily basis.

Thanks to graphs provided by Zilow, Trulia and Realtor, investors can get a better idea on average costs in a given area, but that’s just the tip of the iceberg. Dig a little deeper and you’ll find the history of a property and even mortgage payments, which should paint a bigger picture when considering the property you’d like to invest in.

Thus the Automated Valuation model offers both buyers and sellers the necessary information for determining their next move. Real estate investors can, likewise, come up with a game plan based on the available data.

Home Flipping Reports

If becoming a landlord is of no interest to you then perhaps you’d like to dip your toe in the real estate market by becoming a house flipper.

House flippers buy undervalue properties and improve them with the express aim of selling them within, generally, six months after the initial purchase. If you’re handy with renovations and modifications, this could be the perfect niche for you. How will you know if it’s worth pursuing, though?

Annual or monthly home flipping reports will give you a better idea of what the market looks like. Are there a lot of home flippers in your area? How many homes are profitable where you live?

Most importantly, though, you’ll get a better idea of what profits you can expect if you go down this path. Luckily, these reports provide data on how much investors take in before deducting expenses and taxes. By analyzing the gross yield you’ll know if investing in this manner is profitable and, if the market is currently saturated, when you could start your new business.

Foreclosure Reports

Foreclosure sign.
Photo by Andy Dean Photography – Shutterstock.com

Whether you want to assess the market or an individual home, you should always take a peek at foreclosure reports. The information gained from them could be useful in some cases, but you should always take it with a grain of salt. That’s because these reports don’t always show up to date information and can instead lag behind by several months.

But why do investors insist on considering them? They’re mainly important to try and get a feel of the market in a certain area. If you’ve noticed that there has been a spike in foreclosures as of late then it might not be a good idea to start investing. If a neighborhood is experiencing economic difficulty it’s best to set your sights elsewhere and wait for things to level out.

Alternatively, you might find hidden gems with the help of these reports, and more often than not a hidden gem can help you get a jumpstart in the real estate investment scene.

Choosing Your Property and Strategy

At the end of the day, data analysis can help you make the best decisions with your money. It can give you an idea of current trends without spending months trying to collect statistics on your own.

For example, let’s say you’ve always been interested in purchasing a vacation home. If the reports show that the market is oversaturated, you’ll have avoided a huge waste of money and time. The numbers will instead point you in a much more profitable direction.

It can also give you an idea of how certain properties will fit in your arsenal. Have you been eyeing a condo you’d be interested in renting out? You might find one that’s great on paper, but if a report says it’s been listed for 300 days with no offers then you can probably tell that something is not on the up and up.

Perhaps it’s overpriced or it has other underlying issues. Instead of wasting your time by checking the property out for yourself, you can skip it right off the bat.

As we always say, the most successful investors invest with logic, not feelings. Data analysis will provide you with all the necessary tools to make a smart purchase at the right time.

 

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