STELLAX SEARCH ENGINE
Stellax Search Engine aims to make identification of profitable investments easier. Stellax constantly monitors the real estate market and calculates the potential return of each of the properties that are currently on sale. The users are then allowed to adjust their search criteria to find the investments that suit them best. Read the description of the variables below carefully before using the tool.
It is vital for an investor to understand that a higher return usually implies a higher risk. Therefore there are other factors (apart from the potential return) that should also be taken into consideration when making a prudent investment decision. Currently the factors included in the search criteria are:
Gross rental yield is a measure of investment return. It is calculated as the estimated annual rent divided by the asking price. Note that the actual return received is lower than the gross yield, because the latter does not account for expenses incurred by investors. The average gross yields for relatively large apartments hover around 4-5% in Amsterdam (check here). One can also get an estimate of a net rental yield on the report page.
Days variable is an estimate of the number of days it will take to rent out a property. Stellax employs a separate model to compute it and considers such factors as location, rent amount and size in its estimation. The lower value of the variable implies that the investment will start to earn return and pay off sooner. Often times the algorithm finds the properties that have an estimated gross yield of >10%. Pay a special attention to the days variable in that case, since it may take months to rent out such property.
There are many parameters to consider when evaluating risk and therefore a risk scoring model was developed to combine those parameters into just one metric – Stellax Risk Score (SRS).
Different risk proxies matter more to one investor than another , but Stellax aims to calibrate the metric as a consensus forecast based on opinions of professional investors (which would be of great help to ocassional investors). More parametrs and more professional opinions are expected to be included and inquired in the future.
Currently SRS is a composite of:
– Population change
– Population density
– Days to find a tenant
– Construction year
– Property size
– Neighbourhood (local crime and income)
– Area amenities (shops, cafes, restaurants, etc.)
The score ranges from 1 (highest risk) to 99 (lowest risk).