Heat maps for real estate investments
Foot traffic analytics and location intelligence techniques have become key factors in the real estate investment process.
In the process of searching for selecting areas for the acquisition of properties for real estate development, investors focus on finding the one with the highest expected return on investment. This process, which until now was done using traditional financial and feasibility studies, has now become incredibly simple with foot traffic analytics and location intelligence based on Big Data.
What is a real estate heat map?
A real estate heat map is an analytical tool that uses visual cues, locations, footfall of people and vehicles, as well as numerical data, to distinguish different locations based on their performance. This tool uses different colors to represent different levels of foot traffic in ranges of important real estate metrics.
The use of this analytical tool makes it possible to locate areas with investment properties for sale that promise good profitability, making the process much easier and faster.
How does it work?
A real estate heat map uses predictive models, property data, and characterization of points of interest, showing the mobility patterns and average relative wealth index characteristics of different areas using different visualizations.
PREDIK Data-Driven’s heat map solutions allow real estate investors to perform an analysis of a location to identify the areas with the most feasible sales prices, average rents per rental, cash yield, and occupancy rate.
Using a real estate heat map identifies whether the area is the right fit; you start by choosing a city and filtering by sales price, focusing on mapping areas that are marked in red, as it presents the areas with the lowest sales prices, generating a rough idea of what the colors reflect in terms of real estate prices.
Once you have decided on a rental strategy, you identify the areas with a high cash return, which will be shown in green; while it is possible to choose a neighborhood with a high return, you have to perform a deeper analysis of the investment property to determine how its one-time financing will affect the cash return of the specific rental property.
A real estate heat map can also be used to show the rental income that each rental strategy can produce, identifying which rental strategies have the best potential rental income in each neighborhood and getting ahead of their competition.
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The Final Result
The real estate heat map tool is a very important tool in real estate investing as it will provide you with local market information for each area of interest, such as average property prices, average cash on cash yield, average rental rates, and occupancy rates. A real estate investor can adjust their search results to filter out neighborhoods with investment properties for sale that do not meet the search criteria.