4 Best practices to conduct a real estate investment analysis

Real estate investment analysis is a critical process that involves evaluating potential investments based on financial performance and long-term risks, leveraging a variety of metrics and methods to make informed decisions. This guide explores how investors analyze opportunities using parcel data, zoning, and infrastructure patterns, with tools like Felt transforming data into visualizations to aid decision-making. Types of rental properties, such as single-family homes, multi-unit buildings, commercial spaces, and mixed-use properties, each present unique risks and management needs. Key metrics such as the 1% rule, cash flow analysis, capitalization rate, internal rate of return, net present value, cash-on-cash return, and debt service coverage ratio help in assessing income, risk, and long-term value. Best practices for analyzing real estate deals include defining investment objectives, researching strong locations, conducting thorough due diligence, and diversifying investments to mitigate local economic risks. Felt's cloud-native software enables real estate teams to visualize data and collaborate, enhancing the ability to track market changes and make strategic investment choices.