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Series Part 5: Real Estate Investment Deal Analysis - An Introduction

by Randy Gridley


 

Cash-on-Cash Return (COC) 

In the same way there are multiple measures of income, for example Cash Flow (financing dependent income) and NOI (financing independent income) there are multiple measures when it comes to returns as well. As mentioned before, the theoretical return on the fully paid property (or financing independent rate of return) is known as the Cap Rate. In addition to this, there is the real rate of return - in other words, the non theoretical return. Since this return is directly related to the amount of cash you put into the investment, it is known as the Cash-on-Cash or COC return. 

As an example, we went over the fact that putting $100 into a savings account would give you a return of $4 per annum - also known as a 4% ROI. The COC is the same measure, except it relates to the return you would get from putting that $100 into a property instead of a savings account. 

This is how the COC is calculated: 

COC = Cash Flow divided by Investment Basis 

In the example we used, the annual Cash Flow is $11,621 while the cash that we had to invest in advance on the property was $98,000 - which includes the closing costs and improvements as well as the down payment. So, in this case, the COC is: 

COC = Cash Flow divided by Investment Basis 

= $11,621 / $98,000 

Which comes to a COC of 11.86% 

Since the COC is directly comparable to the return on a savings account, it is clear that in this case the property offers a better return than the savings account. In addition to this, although there is a lot more energy and time involved in the property investment, the return is higher than that of a diversified stock portfolio. 

Although it is naturally up to you what rate of return you require when purchasing a property, it is clear that if the COC is less than 10% it is probably not worth it, and you may, in that case, be better off investing that money in the stock market, which requires a lot less work. 

However, it's important to not make any final decisions based only on the COC since there are other aspects to consider that will affect your bottom line other than the COC. 

Total ROI 

The other key financial considerations to take into account, that will affect the performance of a property are as follows: 

Tax Considerations. You may lose or gain money on taxes, depending on your individual situation. 

Property Appreciation. It is not always possible to predict this, but if you are able to, it is worth taking into consideration. 

Equity Accrued. Since your tenants are paying off your property for you, it is worth taking this into account. 

There is an important difference between Total ROI and COC. COC refers only to the financial impact of Cash Flow on your return; Total ROI takes into account all of the factors that will affect your bottom line. Calculating Total ROI: 

Total ROI = Total Return / Investment Basis 

Total Return is the combination of: Cash Flow; Appreciation; Taxes; and Equity Accrual. 

Let's look at the following example of a Total Return calculation. 

We'll say the appreciation on the value of the property this year is 2%, based on the improvements that we'll be making after the purchase. This means the appreciation figure will be $8,360. 

The equity accrued in the first year of the mortgage comes to $3,251. 

For this example, we'll assume that there are no tax breaks or extra tax due if we own this property. 

So, the calculation of the Total Return of this property for the year is: 

Total Return = $11621 + $8360 + $3251 + $0 = $23,232 

Which makes the Total ROI: 

Total ROI = Total Return / Investment Basis 

= $23,232 / $98,000 

Total ROI: 23.71% 

Not bad! 

SUMMARY OF FINANCIAL ANALYSIS 

It's important to bear in mind that although we have all of the data we need in order to assess the value of the property, the assessment only refers to the first year of ownership. The return on your investment may increase or decrease over subsequent years due to changes in the variables. For example, expenses may rise due to inflation, while accrued annual equity will increase. Rental rates may decrease or increase according to the market, and your tax situation may change. 

Although it is not possible to predict the future, it is a good idea to use trend data or demographic data that indicate inflation and the direction of the market etc, in order to extend your analysis a couple of years further. 

As an example, this is a full financial analysis of this specific property, using a spreadsheet I've created which enables you to easily put together a financial model for the property of your choice. You can either click on the link or paste it into the address bar of your browser: http://www.biggerpockets.com/renewsblog/wp-content/uploads/2010/06/analysis.jpeg 

You can see from the example that if the revenue increases by 3% per annum due to rental rates rising, and operating expenses increase as predicted by 2% per year due to an increase in cost of services and inflation etc. the cash flow will also increase each year, along with the rates of return. If you were to carry out a more in-depth analysis, taking into account factors such as taxation issues, including deductions you would probably receive on the interest portion of your loan, you would find that your return could be even better.

 

Best Rates Of Return
As you probably know, cash flow is not the most important factor when it comes to analyzing the value of a property. The rate of return is more important, (also referred to as your ROI or return on investment). You should think of ROI as the amount of money you will receive in comparison to how much money you actually invested at the onset (your basis). From a mathematical perspective, that would be:
ROI = Money / Investment Basis
When thinking about ROI, it should be obvious that it will be much higher when either one, or both, of the following concepts is true:
The amount of your cash flow is going to be higher, or your Investment Basis will be much lower. As you can see, referencing the equation that we have just given. Making more money with a smaller investment makes it even better!
What is a reasonable ROI?   An example would be putting your money in a savings account with extremely high interest.  Your return (which would be your interest rate in this particular scenario) would be 5%. Mathematically speaking, if you are able to invest $100, you will get about five dollars back by the end of the year: In this scenario, we have an investment getting 5%. If you have a CD, 5% ROI is what you should expect. With some research, you will see that if you invest in the stock market itself, you are going to nearly double this.

What is the ROI with a property?
When looking at this, you will see that there are three numbers related to ROI that you should think about; let's examine each of these independently.
Capitalization Rate (Cap Rate)
NOI or key income value is independent when looking at financing. The ROI is independent of the buyer and details area the value is called the Cap Rate which can be calculated like this:
Cap Rate = NOI / Property Price
When looking at a financial analysis pertaining to any type of property, such as a rental property, this might be the rate. It has nothing to do with financing or the buyer and is simply an indication of how much money you will earn.
The following is the Cap Rate for the property we are discussing:
Cap Rate refers to an all cash deal where you paid for everything. This is different from cash flow. By paying all cash you are maximizing your returns, and the Cap Rate isn't the highest amount of return you can get. The Cap Rate refers to how much you invested for the full price of the property itself, and in our discussions of ROI, the investment amount will actually be reduced.
When it comes to looking at Cap Rates, which one is best? It depends on the location of country you are in and also the maximum Cap Rate which could be as high as 12%. When looking at a single family homes or other similar properties, the value of this investment, in regard to the Cap Rate, is found by looking at the other properties. On average, the Cap Rate is about 10%, which means you should be searching for a property that can generate 10% (of course excluding any other considerations and situations that may arise) which is most definitely a much better investment when compared to a simple savings account with a lower interest rate which makes this a much better investment to consider when you are using your money.

Continued in next blog article...

Real Estate Investment Deal Analysis part 3

by Randy Gridley


 

Data Gathering

We already talked about the input data you need. Now, you are going to find out where to get the data:

- Property Details: the seller should be able to provide you most of this information, but if you need more details, you may contact the local County Records Office

- Purchase Information: the price is going to be decided upon by the seller. This price should be negotiable. All upfront improvement and maintenance work that needs to be done in order to bring the property to its market potential should be known. In case of properties that are in good condition, there may not be any extra cost related to such works. It is always best to order a detailed building inspection by a specialist in order to discover any hidden problems of the property.

- Financing Details: You must get in touch with the broker or institution that's going to lend you the money for the purchase of the property.  You will need to find out which is the cost of the loan and how big the down payment will be.

- Income: These figures should be provided by the seller.  In order to have figures that you can truly rely on, you have to contact the property management company, if any, and get the exact information.

- Expenses: These should also be supplied by the seller.  Once again do not rely on pro-forma data for your final analysis. If there's any property management company taking care of it, contact them to give you the data. You could also hire a building inspector in order to assess major improvements or repairs that are going to be needed in the future such as a new roof, AC or heating system replacement and other similar things.

Example of Property

This will be a tutorial aimed at giving you the knowledge and the tools to be able to evaluate properties on your own.  I'm going to use a fictitious apartment building for sale. You should go and collect all the real data if you want your analysis to be as close to reality as possible.

These are the high level details of the building. Follow this link to see them: http://www.biggerpickets.com/renewsblog/wp-content/uploads/2010/06/flyer.doc. This document is close to what you might get from sellers as pro-forma data on the property they want to put up for sale. If the seller is professional, the document would probably look much better.

Example of Financing

All data that you will need for your calculations is included in the above flyer. You can go ahead and make your analysis based on it.  Keep in mind you will  need actual data to use in your evaluation before signing the contract. There's one thing the seller won't be able to tell you and that's how your financing in going to be. This is something only the lender or the mortgage broker can help you with, since they are the ones who are going to give the money for the transaction. For our dummy evaluation, let's assume we got in touch with the lender and we've got the following data:
- Price: As listed in the flyer
- Improvements: $10,000, as listed in the flyer
- Finance Amount: 80% of total cost
- Interest Rate: Fixed 7% over 30 years
- Closing costs: 2% of the total property cost

Starting from this set of data, we can do the calculations we are going to need later on in our analysis.  Now that we have all the data, let's proceed to the real evaluation!

NET OPERATING INCOME (NOI)

The Net Operating Income (NOI), is the total value of the income generated by the property after all expenses. This does not include debt service costs.

From a mathematical point of view, we have this:

NOI = Income - Expenses

The basis for calculating the NOI is the monthly income and expense data. Multiply it by 12 and you've got annual figures. Now that we have the formula for calculating the NOI, let's see how to get the data.

Property Income Assessment

The gross income includes rent collected from the tenants, parking fees and other costs such as income from laundry or ironing facilities. Our fictitious example has 8 units renting for $525 to $650 per month.

The laundry facilities in the building bring us an additional yearly income of $2,400 or $200 monthly income. We come to a total monthly income of $4,700, which means $54,000 yearly income generated by our property. This is not bad, but let's see what else is important that we did not take it into account in our calculations.

An important percentage of this amount comes from tenant rent. We need to take into consideration the fact that we might have some unit vacancy.  You can find out the average vacancy rate in that area and estimate yours as being a bit higher, just to make sure you are covered. If can also take a look at your history data and see whether the vacancy rate of the building was higher or lower than the surroundings average. It is always  better to be a bit conservative and assume your vacancy rate higher than the real one. If you assume the opposite, you may end up counting on income you actually don't have. This will generate more problems. Trust me, you will be sorry for your assumptions!

Now you need to assess the total income generated by your property by subtracting from the total figure you already have, the value of the income you won't get due to the vacancies. For the sake of our tutorial, let's assume that in our example property we only have an estimated vacancy rate of 12%. This means $4,160 in absolute value, which we need to subtract from $54,000. This is how we calculated that our total annual income would amount $49,920.

Real Estate Investment Deal Analysis Introduction

by Randy Gridley

 

 

If you always wanted to know what the meaning of a Cap Rate or of a Pro-forma, or how to calculate a NOI (net operating income) or various types of ROI ( return on investments), these series of articles are for you. 

There are also forums available online, such as discussion forums like Bigger Pockets, where people talk to each other about methods of evaluating real estate deals. While some forum contributors have quite a good understanding of the basics of a financial analysis, most people there are looking for help when it comes to basic concepts of evaluating deals.

I  love to answer questions, but it is very time consuming. Therefore, I put together a series of blogs and now I am making my blogs widely available to all consumers.  It is not a comprehensive blog, but it can serve as a very good starting point for beginners. Read this blog and the rest of the series to gain a better understanding of the whole property evaluation mechanism. 

INTRODUCTION

Have you ever thought real estate investments could be a profitable endeavor that would allow you to lead a good life, away from financial problems? If you have, maybe you want to know how to make a good analysis of a property before investing into buying and perhaps renovating it. There are methods to find out whether a deal you've landed is truly a deal or only a rip-off. There are lots of details I won't be touching here, but after you read my series of blogs you'll have the understanding of how to use available data and your brain to evaluate a property.  Be it, a multi-unit residential property or a 500-unit apartment complex. The common denominator is that they all offer living space for one family or more. Properties are often sought after, as they can make excellent long term investments.

These articles help you learn how to perform a financial analysis of any residential property you may intend to buy. The property size affects the analysis, but for this blog's purpose, we can make some assumptions, following that you adjust everything according to the size and the conditions of your property. However, if you are interested in a single-family rental, this analysis will work very well for you also. Single family homes are easier to evaluate, because the market is not affected by the same factors as in case of multi-family properties. Basically, a single family home, whether you buy it to live in or for investment purposes, will gain value if all other properties in the neighborhood gain as well. If these properties lose in value, yours is going to lose as well and there are very few things you can do to prevent this from happening. If a property equivalent to yours in size, number of rooms, number of bathrooms, condition and garage size will sell for an amount of money, you can be almost sure yours is going to be in the same price range. 

Larger residential buildings have other criteria for evaluating their value. This is the result of the total income the property has the potential to generate. The more money it makes the owner, the higher its value of the market is.  That is a given fact. In such cases, comparisons with buildings in the neighborhood don't make too much sense. 

Keep in mind, this analysis is centered on multi-unit residential properties. It isn't totally valid for all types of commercial property. You are going to need more information and perhaps other readable material to teach you how to evaluate industrial or storage space, commercial buildings or retail space. All these are handled differently and they are not factors of this tutorial.

The Information Gathering Stage

Before you buy any type of rental property, you must fully understand the different factors that must be included in any analysis of property value. This type of financial investigation requires putting high-quality information about the property into a working financial model. If both the model and the data are good, you will get the information that you require to tell whether or not a potential investment will be the right one for you.

Here is a list of the type of data that you will need to explore residential rental properties to get the condensed and accurate analysis that you need:

1. Basic Information About The Purchase Price: This includes the asking price and the room for negotiation as well as the cost of remodeling the property and any additional improvements necessary to make it attractive to renters. 

2. Financial And Loan Details: Find out how much of the purchase price you must put down as a deposit, what the actual loan principle will be, and what the interest rate of the loan will be. Find out the dollar amount of closing costs. 

3. Income Generation Potential: Explore the past rental history of the property and find out how much rent you can expect from each unit per month. 

4. Ongoing Expenses: Explore basic costs such as monthly property insurance premiums, property tax assessments, and expected costs of maintenance. 

In order to get reliable information about the income potential of the property, you must have good data to input into your financial model. Not doing your due diligence here might trick you into passing on a great property or getting stuck with a property that drains your pocketbook. 

Actual Data Versus Pro-Forma Data

Multi-unit rental properties are valued according to two things: how much income they generate and how much of that income is retained as profit. For this reason, the information given by the seller should be viewed and used with caution. For example, they may exaggerate how often the units are filled with paying renters, or they may neglect to mention that much of the profit has been made by foregoing needed repairs. These numbers can make a property appear to be worth more than it actually is. 

This problem area in financial reporting means that your job is to filter through the data that you receive to find the true story underneath it. 

You are probably asking yourself how this is done. 

Keep in mind that during the initial stages of negotiation you are receiving pro-forma data from the seller. Pro-forma means that the information is not actual but is estimated instead. It is your job to get the actual figures that reflect both the expenses and the income before you close. The seller should share his maintenance records, property tax bills, and rental income with you. 

If the actual data is the same as the pro-forma and you were already interested, you probably have a good deal on your hands. However, if the actual data makes the pro-forma data seem more creative than accurate, redo your thinking by inputting the new information into your model.

In addition, you'll want to investigate to find out if the property will cost you more in the future than it cost the previous owner. Find out how long its been since a property assessment was done. You might be in store for a big jump in the cost of property taxes. Keep in mind that incremental increases in cost can have a large impact on your bottom line over time. 

Be sure and check my blog for the next article in the series.

Building Wealth By Purchasing One House at a Time

by Randy Gridley

 

Just looking at a house will not make you rich in any way. You need to buy the house first and then see if you are able to make money out of it. One very important thing to remember is that you have the potential to make thousands of dollars in profits every time you purchase a house that someone else would love to rent or own.

Real Estate is Your Best Investment -

With more than 49-years of experience in investments, I still prefer to buy houses rather than shopping complexes or apartments. Why? Houses are definitely going to make me more money.  A common misconception within the business circles are that commercial buildings and apartments contain less work and you gain more profit. This simply is not true. I have owned both of these properties. Tenants in commercial buildings and apartments would often come and go. The property would need refurbishing as soon as the tenant leaves it. As the owner, you will have to undertake trouble finding new tenants to occupy these buildings. Apartments and commercial buildings require lots of on-going work. If a dispute should arise once you have rented out a commercial building, it will definitely cost a lot of money including lawyer's fees and other dues. Tenants of these commercial buildings have accountants and lawyers, and they can afford to drag such disputes out for a long time. Also, if you rent your building to a tenant with a "big name", you will definitely get a lower rental because they have a name and you want to entice them to rent out your building.

If by chance, your tenant should file for bankruptcy, you will have a client who doesn't pay the rent on-time or one who renegotiates for a much lower rate. If the tenant doesn't pay the rent, you can definitely hire a lawyer and sue him or her, but if they are bankrupt, you will not get paid anyway.

You will have to attract good tenants that will look-after your building and pay the rent on time. You will have to purchase a property that you can rent to someone who is not a good negotiator, and someone who would need you more than you need him or her. As a side benefit of purchasing and managing houses, you can help other people sell their houses too. A licensed Realtor in Idaho, which is where I reside, can definitely earn some extra cash by doing this. This may differ according to the state where you reside, and you can check with your own state authorities about the laws and regulations regarding selling other people's houses. First, you can rent houses to people who need a place to live. And when you decide to sell, you can help these people buy their first home. You will be able to solve a big problem of a person by purchasing a house that an owner can't afford and a house that is ruining that person's credit. You can sell that house for a profit and help a family to own their first house of their life. These are just some of the rewarding and profitable experiences in buying and selling homes.

The Issue With Most Investment Property -

Usually, the buyers of investment properties are other investors. Like you, they also want to purchase for less than the property is worth and with a low down payment. Unfortunately, most banks will lend only 60-70% of the total selling amount.  For this reason, the buyer will not have enough for the down payment, and the deal could very well fall apart. If not, the seller must agree to finance part of the price. Investment property can experience large increases and decreases in value as the economy changes. An empty office building or commercial building can sell for a small fraction of what it costs to build it. A well-located house will appreciate at a greater rate than an average property. It may not suffer dramatic drops in value that are common to commercial properties during business recessions.

Homes are Different -

The value of commercial buildings and apartments will depend on the amount of income it produces. If you lease an apartment for below the market rate, it will be worth less money in no time. But a vacant home will have the same value as an occupied home.

Investing in houses is safer for several reasons. First, there is less money involved since you can buy a house with a small down payment. The less risk you will have because of this. Lenders will finance more for a house than any other real estate. Next, there are more buyers for houses than there are for bigger properties. You can sell a house in a hurry, if offered at a competitive price. Third, the house could be rented faster and with fewer vacancies. Apartment vacancies often would run 10-20% while house vacancies rarely exceed 5%. Commercial properties can sit empty for months and years at a time between tenants.

Dealing with an Anxious Seller -

When you buy a house, you are mostly dealing with a homeowner who is in a hurry to sell. If the homeowner is in a hurry to sell, you can get the house for a lower rate than usual. This is a great bargain on your part. The lesson is to never sell in a hurry even if you decide to buy a house that is sold on a hurry by someone else. Your negotiation experience will count a lot when buying and selling houses. You should be able to negotiate better than the other person when buying or selling houses. 

Real Estate And What You Need To Know On Investing In It

by Randy Gridley

Real Estate And What You Need To Know On Investing In It

The number one way to lose a lot of money in real estate investments is to make hasty decisions. Most people who are successful with their investments enjoy success because they have done the research and have years of trial and error to look back to. This article is just the first step in helping you reach your goal of real estate investing.

Never invest in a piece of real estate that you have not had inspected by an independent or third-party professional. Some sellers will offer to cover the inspection, but they might be using some who favors them. Always get a neutral report or a lookover from someone that you personally trust.

Keep an accountant on speed dial. You can be aware of tax laws and current taxation; however, there are many variables to keep in mind. A good accountant, that understands and keeps abreast of tax laws, can be an invaluable asset. Your success with investing can be made or broken by your approach to taxes.

Remember to select places that a lot of people know in order to gain lots of interests from clients. This is something that's important because it will help the resale value of your purchase. You should also seek out properties that aren't difficult to maintain.

Pick one core strategy and get good at it. Your choices range from buying and flipping, buying and rehabbing or buying and renting. It is easier to master one of the three choices than dabble in two or three. In general, you make the most money in the long run by buying and holding.

Hopefully, this article has helped you see that there is more to real estate investments than really meets the eye. It is important that you take baby steps when you finally set your eyes on a property and use what you have learned today. After all, the more you know, the better your chances of turning a profit.

Real estate for sale in Boise, ID through IDX/IMLS:

Turn Your Search For Knowledge About Real Estate Investing Into A Success

Real estate investment can be a scary venture. You need to have good information to begin with. Once you know what you are doing, it can be very profitable. Check out these ideas to give you a great place to start. Once you know more about investing, you can be more comfortable with your decisions.

It is possible to get contracts set up for free. However, always be wary of doing this. Those free contracts may not hold up in court. Instead, find a good lawyer and pay a bit to have the contracts done the right way for you. You will not regret it.

Always find out about the values of other properties in the area. Local mortgages and rent rates will teach you more about a property's value than some financial statements. Once you've got the ground level knowledge, your decisions will be all the wiser.

Inspections cost money. However, if there are problems with the property that cannot be seen by the naked eye, you are likely to spend much more money in the long run. Therefore, think of an inspection like an investment and always have one done prior to purchasing a property. It may not uncover anything, but there is always the chance that there is something seriously wrong with a home.

Try not to overextend yourself. Don't get overeager. Start small and work your way up. Don't just assume that you can spend a great deal and make that money back. That's an easy way to back yourself into a corner. Wait until your smaller investments can fund some of your more ambitious ones.

While all investments are somewhat of a risk, this information should minimize yours. Take note of the facts presented here. Making sound decisions is based on having knowledge. You have already begun that process. So, keep learning and you will have a good time investing in the real estate market.

Homes for sale in Boise, Idaho provided by IDX/IMLS:

Allay Your Worries By Reading This Article Regarding Real Estate Investing

Something that a lot of people are interested in would be real estate investing. This is a great market to get into to make and spend money. It is, however, not too simple to get into. If this is what you want to learn more about, then keep reading this information.

Before investing in any form of real estate, make sure you analyze the market and go out and do some research. Check out anywhere from 50 to 100 properties in your desired location and take notes in a spreadsheet. The things you should be looking at are the current prices, repair budgets, and expected rent. This can help you sort the good deals from the bad ones.

Marketing will be crucial to your success. Marketing is what generates your leads. Without solid leads, you are not going to find good deals on properties. Therefore, if something is not working in your investment plan, turn to your marketing strategy first to see what is going on and what can be adjusted.

Remember that real estate investing is all about the numbers. When you're buying a home to live in, you may get emotional about the place, but there's no room for that in investing. You need to keep your eye on the data and make your decisions with your head, not your heart.

Do not be afraid to spend money on marketing. It is easy to just focus on the numbers and get fixated on how much marketing is costing you. However, it is important to think of the marketing as an investment in and of itself. If done the right way, it will only benefit you in the end.

As is probably clear to you now, getting into real estate investing can be a little tricky. However, now that you have this great advice, things shouldn't be that hard on you. Just keep what you've read here in mind when you get started and you should have an easy time with all of this.

Can you believe homes for sale in Boise, Idaho for under $110,000 provided by IDX/IMLS:

Real Estate And What's Needed Into Investing In It

by Randy Gridley

Real Estate And What's Needed Into Investing In It

People around the world love investing in real estate to make money, but there is also the chance of losing a ton of money. If you want to be a success in this field and not lose all your money, you will want to read the following tips. Read on to learn all there is to know about investing.

Careful not to overextend in terms of buying property. Real estate investing is very exciting, and sometimes it can get the better of you. You may bite off more than you can fiscally chew. Know your numbers and your budgets and stick with them. Even if it seems like an easy flip, don't go past your budget!

If you want to get into real estate investing, but do not have enough money to buy a piece of property on your own, do not fret. Look at real estate investment trusts. Operating much like mutual funds, you can invest what funds you have available into a larger group pool and still make some money off of real estate mortgages.

If you are already a homeowner or have experience as one, consider starting your real estate investment efforts with residential properties. This arena is already something you know about, and you can start good investment habits. Once you are comfortably making safe money here you can move on to the slightly different world of commercial real estate investment.

You need patience when you begin investing. Your first real estate investment deal may be more time consuming than you expected. There may not be a suitable property within your budget, or the lending market may not offer the terms you want. Avoid being overly eager so that you do not spend money on a property that is not ideal. That would be a poor investment. You want to pursue a deal that makes good financial sense.

When you are done with this article, you should know what success takes. If you don't learn all that you can, you may lose money. Articles like these are a great way to help you become a better real estate investor. Hopefully, your first investment is successful!

Investing in Boise real estate provided by IDX/IMLS:

The Real Estate Investing Advice You Need

by Randy Gridley

The Real Estate Investing Advice You Need

Real estate investment can be a scary venture. You need to have good information to begin with. Once you know what you are doing, it can be very profitable. Check out these ideas to give you a great place to start. Once you know more about investing, you can be more comfortable with your decisions.

Make the decision before you begin investing on exactly the style of real estate investment you want to concentrate on. It may be that flipping real estate is the best fit for you. Or maybe you like the challenge of rehab projects where you rebuild from scratch. Each takes different work, so know what you like and hone your skills.

Inspections cost money. However, if there are problems with the property that cannot be seen by the naked eye, you are likely to spend much more money in the long run. Therefore, think of an inspection like an investment and always have one done prior to purchasing a property. It may not uncover anything, but there is always the chance that there is something seriously wrong with a home.

When deciding to buy a property or not, consider how appealing it will or will not be to prospective tenants. No property is worth your money if you won't be able to sell or rent it, so consider the purchaser's perspective. How soon can you sell? How high will your profits be? These are all things to consider from the buyer's point of view before you buy.

While all investments are somewhat of a risk, this information should minimize yours. Take note of the facts presented here. Making sound decisions is based on having knowledge. You have already begun that process. So, keep learning and you will have a good time investing in the real estate market.

Boise, Idaho homes for sale through IDX/IMLS under $112,000:

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Randy & Doyelene Gridley
Silvercreek Realty Group
1099 S Wells St. Suite 200
Meridian ID 83642
Randy's Direct Office: 208-859-7060
Fax: 208-323-8081

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Contact Us

Our office is located at:
1099 S Wells St. Suite 200
Meridian, ID, 83642

(208) 859-7060
(208) 323-8081
IdahoHomeInfo@gmail.com

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