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 real estate 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. 
No comments:
Post a Comment