Why Novice Investors Should Use Real Estate Analysis Software

investor7Real estate investors who are seriously engaged in real estate investing routinely use real state analysis software to conduct the evaluations they require to make prudent real estate investment decisions.

Fair enough.

Unfortunately, novice investors who may only invest in real estate a few times in their lifetime – perhaps just to supplement their income during retirement – often don’t have a clue how real estate analysis software can help them make smarter investment decisions.

In this article, I’ve listed five benefits of software that I hope will be informative to novice investors and get them at least to consider it.

1. Number Crunching

Foremost, real estate investing is about numbers. Therefore it stands to reason that real estate investors evaluating the potential benefits associated with any rental income property will rely on those numbers to make prudent investment decisions.

Cash flows, for instance, are in fact just computations that reveal the revenue remaining after a property’s cash outflow is deducted from a property’s cash inflow. But cash flow is what investors purchase in a rental property. So it is imperative to compute cash flows accurately using precise data and formulations.

This is difficult, time-consuming, and subject to error when done manually. With real estate analysis software, on the other hand, any real estate investor (regardless how novice) can compute all the essential numbers and returns easily, quickly, and correctly.

2. Data Validation

Secondly, novices without their own means of validating a rental property’s facts and figures must rely on what they are presented by someone else.

But this can be risky (if not foolhardy) when real estate investing because an inexperienced investor can naively fall victim to exaggerated or bias numbers without realizing it until it’s too late.

A good real estate analysis software solution provides a layer of investment protection for the investor by enabling him or her to prove the numbers themselves before they sign on the dotted line and make the property investment.

3. Data Discovery

Thirdly, a good real estate analysis software solution can expose data about the income property regularly not revealed by listing or marketing packages.

For example, listing and marketing packages typically reveal nothing about the tax consequences imposed on the investor as a result of owning the property; whereas in truth, it is not uncommon for cash flows and profitability to appear deceitfully more appealing before taxes than after taxes. It is right, therefore, that investor’s would want to make an investment decision only after full consideration of tax shelter.

4. Data Versatility

Fourthly, a real estate analysis software solution provides investors the flexibility to examine a wide-range of important data surrounding the property that might otherwise be overlooked.

  • cash flow projections
  • how changes in rents or expenses affect profitability
  • investor tax benefit or loss
  • return on equity
  • whether the investor’s investment goal is met
  • optimal offer price

5. Data Comparison

Fifthly, real estate analysis software enables the investor to run the numbers and compare several investment property opportunities – which is not possible otherwise.

This benefit is essential in cases where the novice investor is presented with more than one rental property investment opportunity.

Bear in mind that if you’re only out to purchase one rental property, but given the choice of two, you want to put your money on the one that makes you the most profit. A quality software solution will enable you to measure the profitability of each and every investment property you are presented.

So You Know

ProAPOD provides a real estate investor software solution especially developed so novice investors can conduct a deep-level profitability analysis and learn the formulas for the crucial returns and ratios.

James Kobzeff

James Kobzeff has over thirty years experience as a realtor and investment real estate specialist. He is the developer of ProAPOD real estate investment software and freely shares his real estate investing articles.