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4 Real Estate Investing Elements Crucial to Investors

January 31, 2009

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.

In other words, real estate investing is about making money (and the more the merrier).

Consequently, real estate is not purchased, held, or sold on emotion. Real estate investing is not a love affair, but all about a return on investment. Therefore, prudent real estate investors always consider the following four elements of return to determine the potential benefits of purchasing, holding on to, or selling an income property investment.

1. Cash Flow
This is the amount of revenue from rents and other income less operating expenses and debt service (loan payment). Real estate investing is all about the investment property’s cash flow because you’re purchasing a rental property’s income stream. When purchasing a rental income property, always be sure that the numbers you 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 the future selling price minus original purchase price. Understand, however, that what real estate investors will pay for your property tomorrow depends heavily on its income stream. So make a determination about the likelihood of an increase in income and throw it into your decision-making when purchasing a property. Because the more income you can sell, the more you can expect your property to be worth.

3. Loan Amortization
This signifies a periodic reduction of the loan over time that leads to increased equity. In other words, if you owe $100,000 today and just $95,000 next year, because you owe $5,000 less loan repayment, therefore you’ve added $5,000 to your equity.

4. Tax Shelter
This signifies a legal way for real estate investors to use investment real estate to reduce annual or ultimate income taxes. No one-size-fits-all, 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, but investment real estate typically enables real estate investors to write off interest expense, loan points, and cost recovery (depreciation).

Filed Under: articles

4 Reasons Why Homeowners Might Buy and Sell Rental Property

January 29, 2009

I have long been an advocate for making rental income property as a portion of a real estate agent’s business. In my opinion, any real estate agent that sells houses exclusively and ignores opportunities to sell income-producing property is wasting an excellent opportunity to booster their annual income.

If you think not, consider these four reasons why homeowners, the very ones residential real estate agents serve, are prime candidates to buy and sell rental property.

  1. Whereas homeowners may not be in pursuit of a replacement house, they could be ready to make an investment.
  2. Whereas homeowners typically won’t sell on a moments notice, investors normally have a price they will entertain.
  3. Whereas homeowners may turnover one property in five years, investors habitually buy and sell multiple income properties.
  4. Whereas retirement might mean hunkering down into a house, it commonly signals a designated time to unload management-intensive rental property.

You get the idea.  Selling rental property offers a ton more opportunities to make money than residential property, and as a real estate agent, you’re in the right place to seize it.  So how do you get started selling apartments with little or no experience? You might be surprised to learn that it’s not that difficult.

  1. First, dismiss the idea that you need to become an investment expert. Deals are closed every year by hundreds of residential agents who know little about income-producing property.
  2. Secondly, recognize the importance of numbers to real estate investing and think about buying real estate investment software to help you present those numbers in a professional fashion to sellers and buyers.
  3. Research your local market and acquaint yourself with income property prices (listing and sold). Use the real estate investment software to create an APOD for each property. Study the cap rates. Become knowledgeable about rental property prices and rates of return.
  4. Call your customers and ask whether they want to invest or perhaps own a multifamily property for you to sell. Discuss the market, present your numbers. Let them know you work with income property.
  5. Announce to your colleagues that you’re equipped to service rental property and prepared to pay a referral fee.
  6. Watch the classifieds and call on land or units listed by FSBOs. A colleague of mine called on a vacant lot listed by a FSBO who turned out to be an investor and subsequently listed about 100 apartment units for the guy.
  7. Call property management firms in your area and ask whether any of their clients might consider selling or buying property.
Filed Under: other

ProAPOD Update Adds Currency Symbols

January 27, 2009

ProAPOD real estate investment software version 10.0 has been updated and is now available for download to qualified customers. Customers are required only to login to their account to retrieve this newest real estate investment software update.

Here are the modifications to v.10.0 made by this update:

  1. Currency Symbols – This feature enables the user to select any one of five different currency symbols, including DOLLAR, POUND, RAND, EURO, and YEN. The user simply opens the appropriate menu from the customized toolbar and selects the desired symbol. The rest is automatically completed by our real estate software. Instantly, in the blink of an eye, ProAPOD real estate software changes all the currency symbols used inside the forms and reports to the symbol chosen by the user.
  2. Passive Losses – This feature enables to user to choose how our real estate investment software treats annual passive losses. The user simply opens Analysis > Passive Losses from the customized toolbar and selects either “Losses carried forward” or “Losses taken currently”. “Losses carried forward” is the default setting and currently the IRS regulation, but this feature intends to satisfy real estate analysts who prefer computing passive losses in the year that they occur.

Screen shots for both, the currency symbols and passive losses features are available at http://www.proapod.com/Update/1-26-09.htm

To obtain this FREE update, users must

  1. Currently use ProAPOD 10.0
  2. Currently have an active membership – If your membership is expired, you can renew your membership for just $39.95. This will enable you to download this latest update and entitle you to receive FREE software updates as they become available for one additional year. Simply login to your account and click “Renew membership.”

Customers who are using version 6.0 who would like to have this newest version of 10.0 can purchase an Upgrade for just $129.95. This will give you two downloads of ProAPOD 10.0 and FREE software updates as they become available for one additional year. Simply login to your account and click “Upgrade to 10.0.”

Customers are urged to report any issues caused by the update to the real estate investment software developer immediately.

Filed Under: software updates Tagged With:
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