With tons of data available, investors can use machine learning algorithms to more quickly interpret data and create more accurate predicting models. While this might seem daunting, one way to automate data processing is by accessing APIs—application program interfaces. An API is a way for applications to interact/interface with one another. Using APIs alongside traditional data allows investors to pinpoint hyperlocal trends that can predict potential growth. It’s important to remember that the data alone won’t do much if you aren’t able to use it to create a fast strategy.
Click here to read more about other non-traditional data sets you might want to consider
As I previously wrote, accessibility to points of interest is a great predictor of a positive investment. Understanding all of these elements allows investors to see a fuller picture of the neighborhood and be on the forefront of trends, leaving more money on the table for you and your investments.
Proximity and Accessibility as Non-Traditional Predictors:
Proximity seems like a no-brainer, but it’s the right mix of community features that equates to a good investment. For instance, having two specialty food stores correlates with increased property prices, while four correlates to lower prices. Using APIs allows investors to better analyze this nonlinear relationship to pinpoint the “sweet spot” between density and proximity to amenities.
Here are three APIs that provide non-traditional data points that could help you predict potential real estate growth:
In its most basic format, Yelp is a business directory and crowd-sourced service that is free (up to pre-set 24-hour limits) and easy to use. As of 2017, Yelp API provided data and information for over 50 million businesses.
What does this API provide?Yelp provides data for developers, no matter their size or background, that allows them to extract local business information to pinpoint the “sweet spot” for points of interest. While Yelp is probably best known for its restaurant-related data, it also provides information for a wide variety of businesses in the form of business reviews, phone numbers, transaction types, and more.
How can investors use this data to predict a profitable investment?Proximity to amenities and the changes in neighborhoods give investors a mid-to-long-term view about how their investments may evolve. For instance, if your buyers are looking for peaceful open land, but the neighborhood is becoming more noisy—observable by seeing a snapshot of new developments popping up—the residential valuation down the road may decrease.
According to Investopedia, a truly great neighborhood will have accessibility, appearance, and amenities. If people have to drive far, your investment may not be as profitable. However, looking at what amenities are popping up and the tone of reviews on Yelp will help you predict the future of your investment.
Walk Score API
Similar to Yelp, Walk Score gives neighborhood information. It measures the walkability between points of interest on a scale of 0-100 (with 0 being non-walkable and 100 being very walkable). Walk Score also offers two other features that can be crucial in the decision-making process for investors:
- Bike Score employs a similar 0-100 scale and measures the bikeability of locations. When compiling a score, the following factors are taken into consideration: the availability of bike lanes, hills, bike commuting mode share, and road connectivity.
- Transit Score measures how well a location is served by public transit on a scale of 0-100.
What does this API provide? For developers, Walk Score—and its companions, Bike Score and Transit Score—can be valuable tools to better understand how real estate investments can be affected by how “walkable,” “bikeable,” and public transit-friendly local businesses are to a current or potential investment’s address. For all three features, the higher the score, the better as far as investing is concerned.
How can investors use this data to predict a profitable investment? Especially in more urban areas, where walking, mass transit, and biking are the preferred (and sometimes only) modes of transportation, understanding these three scores can really make or break an investment. And even in more suburban areas, knowing these scores can definitely affect successful investing since most people don’t want to spend unnecessary time getting from point A to point B and back home again.
One crucial aspect of the profitability and sustainability of a real estate investment is the quality of schools that serve the locale of that investment. This is the kind of information that SchoolDigger provides. Better schools usually equate to a sounder investment, and SchoolDigger is an API that rates the performance and quality of K-12 schools.
What does this API provide?SchoolDigger API provides K-12 data like test scores, demographics, and rankings for over 123,000 schools. It also shows district boundaries.
How can investors use this data to predict a profitable investment? Since the quality of schools in an area is usually a top priority for potential tenants, knowing the SchoolDigger score of a potential investment can play a huge part in deciding whether or not to invest in a property AND when deciding whether or not to sell an investment property if the score starts to decline.
The API shows not only the best and worst schools, but also the most improved. Cross-referencing this with traditional data may populate a geographic area that is up-and-coming. It’s important to keep in mind that all classes of potential tenants use school-related statistics when deciding whether or not an area is right for them: those without children (including the retired population) who want to live in a safe area, those who are planning to start a family, and those with children currently in school.
Accessing APIs can be an important part of your investment puzzle, and understanding how to use this data to best benefit your real estate investment portfolio can pay off now and into the future. If you need help successfully maneuvering APIs or any part of your real estate investment puzzle, contact us. We’re happy to help.