Real Estate Investing Metrics

2 Replies

I'm new to real estate investing, and find myself in the research phase of evaluating markets for house hacking opportunities. My question; what metrics and what tools/websites do people use to evaluate different markets? Cap rates, Cash on Cash Return, Net Operating Income and more. There are so many, but I also struggle to find this type of data. I've found AirDNA for short term rental information, but what about long term rental information? Thanks in advance for your help.

I think you are looking for this kind of short-term rental profit simulation (image attached). Message me, I can share access to this tool. It's an open-source project as well, so you can read the codes behind it too. 

While doing due diligence, I  mainly look into cash on cash return and net profit yield. 

The short-term rental data you'd like to look for as an investor are two things
    1) 12 months occupancy rates 
    2) 12 months ADR 
Also, you would want to compare the potential revenues between two investment options, such as 2bed vs 3bed house etc. Or, 2bed in area A vs 2 bed in area B.  

You should also read carefully on what the ADR includes, as it means differently in different platforms. AirDNA includes cleaning fees and additional guest fees in ADR, I believe. But there are companies that show those two numbers separately. 

I suggest you shop around for different data providers, as AirDNA isn't the only option.

Finding out long term rental rate is easier and more predictable - you can just find them on Zillow or Gumtree.

Thank you @Jaeseok An !  I'm currently investigating multi-family opportunities for house hacking, but I plan to look into short term rental opportunities down the road.  I was wondering what sources were available to evaluate long term rental properties such as multi-family.  Thanks again for the response.

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