I would like to create an automated tool to analyze the cap rates of properties for sale within criteria/constraints I set. After a little research, it looks like Octoparse or Apify can successfully scrape Zillow. These are paid services but they are relatively inexpensive. Assuming they can pull the Zillow data I need, the next step is to pull a rent estimate. The most accurate tool I have found is Rentometer. Rentometer charges about 4 cents per API call. Because of this, it would be best to only target particular cities that are interesting for investment and only run properties from those areas. I think this would result in a fairly reasonable cost.

So for example, say I want to look for houses with 2+ beds and 1+ baths, priced under $400k, no HOA, in Ohio. I would set this to particular cities of interest instead of entire states, however, since doing the latter would pull tons of rural properties that would not be feasible to manage from afar (no property management companies in these areas, not enough population for reliable renting). I am sure this could be narrowed down even further to increase the quality of results and reduce costs. Once houses for sale with these criteria are scraped from Zillow, I would plug these in a batch upload into Rentometer and get the rent estimate. This would give me an estimate of Cap Rate.

Now, obviously there are many other factors to consider when buying a rental property. But this would be very helpful. From this list, I could begin weeding out the bad properties. Places with high crime, high insurance or taxes, etc. Eventually I could manually find some nuggets here.

I am going to attempt this, but first I need to know what are the “hot” markets for investors these days? Everything is extremely inflated right now…a few years ago I was finding decent Midwestern properties for the 2% rule without any issue. Those days are gone and I am just trying to get above 1% these days (1% of purchase price is the monthly rent). So “hot” is maybe not the right term in the current era, but you get it.

I am mainly interested in sun belt states and to some extent the Midwest and mountain west. I like TX, NC, SC, TN, FL, AZ, OK, IA, AR, MO, KS, IN, OH, KY, ID, possibly a few others. Within these I figure it will be difficult to find a profitable rental in the states’ “tier 1” cities so I am interested in the outlying suburbs and places like that as long as population is above 50k and stable or growing. When I did some investing a few years ago, Indianapolis, Memphis, Kansas City, and a few others were all popular for cash flow and high cap rates. Where are the high cap rate areas now?

Thanks for your help and feel free obviously to try the method I described above for yourself. Seems cheaper to me than hiring developers or paying for a CoreLogic subscription.

2 Votes