Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
Hi all,
I am, a Software Engineer, and recently working on a tool, that helps Buy & Hold investor to narrow down geographies, that have higher average rent/price ratios. I am attaching few screenshots for your review; please let me know
1. If you find this useful 2. Any feedback and areas of improvement.
The greener areas have higher rent/price ratio (close to 2% even more at places) and red has lower ratios. I have kept minimum price to 20M to keep screenshots clean; but you can actually see listed properties in these areas when you change that. So, not only you can figure geographies out with this; but also see what is listed and more.
At this point, this is an internal tool that is not released to general audience; so I can't provide you links to play around with, but I am planning to use this feedback to convince people around me to actually build this as a product and release.
Rental Property Investor · Beachwood, NJ · Member since 2015 · 132 posts · 50 votes
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@Tejas Kotecha I think I would. It would be good for someone who is scouting out potential properties in an area that they might not be familiar with, especially out of state.
1. If you find this useful 2. Any feedback and areas of improvement.
The greener areas have higher rent/price ratio (close to 2% even more at places) and red has lower ratios. I have kept minimum price to 20M to keep screenshots clean; but you can actually see listed properties in these areas when you change that. So, not only you can figure geographies out with this; but also see what is listed and more.
I can see where it would be helpful to know the less profitable areas but geez you have the color coding backwards. Green would be the more profitable perceived areas (those with the lower R2P ratios and the red would be the opposite.
@Account Closed Green is more profitable. Higher rent to price ratio i.e higher rental income per dollar spent in acquiring the property.
Tejas, how do you figure that? If POTENTIAL rents are $1,000 a month in a 2% (green by you) area then the seller is willing to get rid of that for ONLY $50,000 because a buyer(the market) Is ONLY willing to pay $50,000 for every POTENTIAL $1000 of rent.
In a .8% ratio area a seller will only give up the potential $1,000 rent for $125,000 because a buyer (the market) WILL pay $125,000 for $1,000 of rent. Who should be GREEN?
Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
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@Account Closed i think I understand it now. You are looking at it from Seller's perspective, while I am coming in from Buyer's perspective. If I am looking to acquire a new property, I want to pay minimum price to get maximum rent hence Higher rent/price ratio is what I am looking for. So Green areas where I have best potential to acquire that gem property(2%) while red areas; where I can't get high yield.
The fact that I have to explain it, makes it a bad design on my part. So that is a note to self; to improve design such a way that it is intuitive.
Investor · Tacoma, WA · Member since 2014 · 83 posts · 40 votes
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I wouldn't make any investing decisions based on this criteria alone. Tools like this would several criteria to search with based on the investors goals.
Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
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@Mitch Dowler I agree; there are many more factors to consider than what is covered here; but idea here is to help you narrow down on few areas before you start doing more research around those areas.
Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
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Originally posted by @Tejas Kotecha:
@Bob Bowling i think I understand it now. You are looking at it from Seller's perspective, while I am coming in from Buyer's perspective. If I am looking to acquire a new property, I want to pay minimum price to get maximum rent hence Higher rent/price ratio is what I am looking for. So Green areas where I have best potential to acquire that gem property(2%) while red areas; where I can't get high yield.
The fact that I have to explain it, makes it a bad design on my part. So that is a note to self; to improve design such a way that it is intuitive.
@Tejas Kotecha NO I am looking at it from the markets perspective. The MARKET includes BOTH the buyer and seller. From the buyers perspective if the market R2P ratio is 2% WHY, when on the other side of the tracks (your red area) the market is paying MORE for the exact same "POTENTIAL" rent dollar? If you can't answer that then your color value means nothing.
Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
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@Bob Bowling I see your point. It seems parallel to "You shouldn't buy in high cap rate areas"; which means color suggesting "good" or "bad" areas is debatable. Rather use neutral colors that don't suggest; let people decide.
El Paso, TX · Member since 2015 · 34 posts · 13 votes
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Hi Tejas,
I like your initiative. I will use it as a free service (assuming you are monetizing the site with ads).
For me the colors are fine based on a buyer perspective; also it is probably easier to sell ads for a site that attracts buyers than sellers. I would think on displaying location of a real estate agents for a small fee when user is zooming around the agent area.
Keep the hard work, the world of geo-information is crowded; I think you need to provide more value to a small niche of customers so they cannot live without your tool.
Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
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@Garrett Coffee Here you go; snapshot from Phoenix. I focused on Scottsdale and surrounding areas. At this level the factors under consideration are avg rent and avg listing price.
Investor · San Ramon, CA · Member since 2014 · 36 posts · 8 votes
11y
@Jaime Barragan Thanks for encouraging words. Idea is to make it a useful tool for Investor's niche. If we find a way to add value to investors, monetization will happen.