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| *Ostroff, Fair and Company>>>Investing |
I want to invest in Real Estate, but I'm not sure how to properly evaluate Properties (by the Numbers)? |
The Numbers!!! That is my biggest concern. I want to be an investor and I know I have to understand the numbers. Someone please help. I want to be able to determine quickly if it is worth pursuing this deal or that deal. I don't want to spend hourse evaluating one deal. How would I know if it isn't worth it? Please provide at least one example. Formulas would be nice too:-) Smart move for the time being, because the property price is still low & rise up slowly. But there is a problem, you have pay high tax on the property that you own. To solve this problem, invest in REIT ( a type of Unit Trust / Mutual Fund)! Look for long term investing, not short term. This way will reduce the risk! If u wish contact me , e-mail : ercino9638@yahoo.com.sg Source(s): search for Reit at your local area. Guy votes for himself wioth that weak answer and it is 'voted' the best?? Give me a break.... the simplest answer. Gross income minus operating expenses. Then take that answer times ten. Give an approximate price you should offer. That is real time income and not projected income. This works real well for four units or more. Dave Lindahl is one of my sources. He promotes buying apartment buildings. I will assume you are talking about resaling these properties and not holding them as one person suggested with the multiplier. The only criteria I use is that after I have done all repairs using conservative numbers and taken out the holding costs (monthly payments, utilities, taxes, insurance), I should take home $30k after I pay all the closing costs and commissions, which I calculate out as 7.5% of the sales price. To me a 30k buffer is the minimum I will accept on a property. As far as ROI goes, if you can finance with low down or get a property subject-to, that is going to skyrocket your ROI provided your holding costs are calculated into the income numbers. If you pay all cash, you are really underutilizing the leverage possible to keep your ROI high. For example, I am currently buying a house at a price of $167k which I will put 10K or less into and sell for $215k. After commissions and closing costs, I will probably only end up at $22k on this deal. But since I will probably hold this less than 90 days because the property needs so little and the market is strong in this price range in my area, that 22k of profit is made on 10k of rehab funds and $12k of subject to equity and holding costs, so my return is roughly 400% annualized. (22k/22k over .25 years) The ROI is the ONLY reason I am doing this deal. Hope that gives you a decent overview of a a numbers calculation and how it runs through ROI. |
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