Real estate investing involves acquisition,
holding and sale of rights in real property with the expectation of using cash
inflows for potential future cash outflows and thereby generating a favorable
rate of return on that investment.
As compared to other investments, less of
misadventure is involved in a real estate property. I will not get away from
the fact that just likes any investment you make; you have the risk of losing
it. Real estate investments are traditionally considered a stable and rich
gainer, provided if one takes it seriously and with full sagacity. The reasons
for the real estate investments becoming less risky adventure primarily relate
to various socio-economic factors, location, market behavior, the population
density of an area; mortgage interest rate stability; good history of land
appreciation, less of inflation and many more.
But aside from leverage, real estate investing
provides other benefits to investors such as yields from annual after-tax cash
flows, equity buildup through appreciation of the asset, and cash flow after
tax upon sale. Plus, non-monetary returns such as pride of ownership, the
security that your control ownership, and portfolio diversification.
Of course, capital is required, there are risks
associated with investing in real estate, and real estate investment property
can be management-intensive. Nonetheless, real estate inventing is a source of
wealth, and that should be enough motivation for us to want to get better at
it.
Real estate is not purchased, held, or sold on
emotion. Real estate investing is not a love affair; it’s about a return on
investment. As such, prudent real estate investors always consider these four
basic elements of return to determine the potential benefits of purchasing,
holding on to, or selling an income property investment.
1. Cash Flow – The amount of money that comes in
from rents and other income less what goes out for operating expenses and debt
service (loan payment) determines a property’s cash flow. Furthermore, real
estate investing is all about the investment property’s cash flow. You’re
purchasing a rental property’s income stream, so be sure that the numbers
you’re rely on later to calculate cash flow are truthful and correct.
2. Appreciation – This is the growth in value of a
property over time, or future selling price minus original purchase price. The
fundamental truth to understand about appreciation, however, is that realestate investors buy the income stream of investment property. It stands to
reason, therefore, that the more income you can sell, the more you can expect
you property to be worth. In other words, make a determination about the
likelihood of an increase in income and throw it into your decision-making.
3. Loan Amortization – This means a periodic
reduction of the loan over time leading to increased equity. Because lenders
evaluate rental property based on income stream, when buying multifamily
property, present lenders with clear and concise cash flow reports. Properties
with income and expenses represented accurately to the lender increase the
chances the investor will obtain a favorable financing.
4. Tax Shelter – This signifies a legal way to use
real estate investment property to reduce annual or ultimate income taxes. No
one-size-fits-all, though and the prudent real estate investor should check
with a tax expert to be sure what the current tax laws are for the investor in
any particular year.
Do Your Homework
1. Form the correct attitude. Dispel the thought
that investing in rental properties is like buying a home and develop the
attitude that real estate investing is business. Look beyond curb appeal,
exciting amenities, and desirable floor plans unless they contribute to the
income. Focus on the numbers. “Only women are beautiful,” an investor once told
me. “What are the numbers?”
2. Develop a real estate investment goal with
meaningful objectives. Have a plan with stated goals that best frames your
investment strategy; What do you want to achieve? By when do you want to
achieve it? How much cash are you willing to invest comfortable, and what rate
of return are our hoping to generate?
3. Research your market. Understanding as much as
possible about the conditions of the real estate is a necessary and prudent
approach to real estate investing. Learn about property values, rents, and
occupancy rates in your local area. You can turn to a qualified real estate
professional or speak with the county tax assessor.
4. Learn the terms and returns and how to compute
them. Get familiar with the nuances of real estate investing and learn the
terms, formulas, and calculations. There are sites online that provide free
information.
5. Consider investing in real estate investment
software. Having the ability to create your own rental property analysis gives
your more control about how the cash flow numbers are presented and a better
understanding about a property’s profitability.
6. Create a relationship with a real estate
professional that knows the local real estate market and understands rental
property. It won’t advance your investment objectives to spend time with an
agent unless that person knows about investment property and is adequately
prepared to help your correctly procure it. Work with a real estate investment
specialist.
Beachworld Residential LLC,a real estate
investment and a management company, since 2000. It is an innovative and
leading edge real estate investment firm founded by Mr. Robert Rothenberg. The
CEO founder remains active in the business and his well-recognized for his
experience, leadership, and knowledge within the real estate investment
community.
Beachworld Residential LLC is by no means an
ordinary company. Mr.
Robert Rothenberg is a well-respected and nationally
known niche real estate investment firm building a nationwide portfolio of
student housing properties on major university campuses, conventional Class A
Apartment Complexes, and NNN Leased Medical/Healthcare real estate throughout
the United States. As a niche real estate investment firm, with a specialized
expertise in high growth asset classes, Mr. Robert Rothenberg stays focused on
real estate providing an opportunity for increased cash flow and large
appreciation.
