Real estate investing software is what EquityScout is all about. Ironically, it's not something that I talk about a lot in this blog. There's a reason for that. In my view real estate investment software is a tool - one of many - that can help investors to reach their goals. Much more important that the tool is the thought process that it supports. That's what I write about - the though process - and readers who identify with the thought process and the philosophy end up check out the tool.
So that said, what are real estate evaluation tools useful for? Here's a few thoughts:
- Real estate investment software adds discipline to the investment process. Buying real estate, by its very nature, can be an emotional process. And that's ok; gut feel and intuition are qualities that are crucial to successful investing. But discipline is equally important. Software can bring some structure to your decision making process.
- Real estate investment software forces investors to explicitly state their assumptions. GIGO :: garbage-in-garbage-out. You can punch in assumptions to make any investment look like a barn burner - but if you're buying a starter duplex in Los Angeles for $500k that rents for $2,500 per month then you're actually going to have to assume a 20% appreciation rate for the investment to break even. And you're actually going to have to type those numbers - "20%" - into the model. Being forced to explicitly articulate your assumptions in this way can be a good gut check - and sometimes can be just the wake-up call you need to get you to take off those rose colored glasses.
- Software helps investors to compare dissimilar investment opportunities. Should I buy a fourplex, that duplex around the corner, or a couple of single family homes? I have a different view on each, how do they stack up?
- Real estate investment software helps geeks to pull the trigger. This, for me, is the big enchilada. I'm an engineer by training, which means that sometimes I can't spell too good (as some of you will have noticed from the occasional typo on this blog) and that I need to see some numbers before I can get off of the fence and take action.
Read here to see more pros and cons of the real estate software approach.
