The algorithm consists of three main components:
- Acquiring the publicly available data on the Dutch residential rental market. The model retrieves over 40 property characteristics from tens of sources including property-specific (e.g. square meters, location coordinates, construction year), hyperlocal geographic features (e.g. school, shop and highway presence in close vicinity) and local geographic features (e.g. neighbourhood crime level, average income, business presence);
- Data curation and processing. The acquired data are structured and cleansed of outliers, wrong data entries, missing values, etc. using various machine learning techniques. The rental price is then modelled employing a proprietary model to incorporate non-linear spatial dependencies;
- Monitoring available properties and rental yield estimation. Stellax monitors the properties on sale on the market and applies the model to estimate the rental yield, which enables to identify the most attractive properties. The rental yield is calculated as the estimated rent divided by the asking price. Note that the estimated rent excludes utility costs and non-owner-related taxes. It is assumed that the property is not rented as bare (kaal).
There is a number of limitations of the model the user must be aware of before using the site:
- The top properties currently get updated once a day around noon (GMT+2);
- Stellax does not fully account for the variability in the properties’ condition in its estimation. The yields should be viewed as if the properties are in the average state in their corresponding neighbourhood. This means that the yield might be overestimated for some of the properties and an additional investment would be needed, which must be taken into account by the user. The same logic holds for the results of the personalized report service;
- At the moment only gross yields are estimated for the top properties. This means that the return is calculated before subtracting management costs, taxes, mortgage payments, etc.;
- The price used in the rental yield computation is the asking price. Due to the fact that many Dutch properties are sold at a premium to the asking price, the yield may turn out lower in reality;
- Stellax does not guarantee any investment return to the service user. The presented figures are an estimation of the algorithm based on the limited information.
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