Archive for the 'Investment Properties' Category

Oct 23 2008

Real Estate Property Investment Series: Focus Morocco 2007

Published by admin under Investment Properties

The Moroccan government realised that the way forward for their nation in terms of creating employment and boosting the economy significantly was to increase tourism and to create an environment so attractive for investors that they would come in their droves and buy up real estate stock.

To that end the government has been promoting Morocco around the world there is a permanent stand at Walt Disney World Resort in Florida heralding the virtues of this North African nation that practically touches Europe across the Mediterranean Sea that divides it from mainland Spain for example, and now the skies over Morocco are open to cheap flight operators from across Europe and the UK. The nation has year round sunshine and is directly south and a short flying time from affluent Western Europe and all of these factors are starting to affect Morocco positively.

In 2006 in the first nine months alone tourism traffic was up almost 10% on the previous year with revenue generated from tourism up almost 30% which proves that the government are targeting the right sort of tourist i.e., the ones who come, stay, enjoy and spend money in Morocco! Looking to the longer term the Moroccan government has plans to increase tourism until 10 million visitors annually enter the nation by 2010. There are even plans afoot to build a tunnel under the sea to connect Morocco to Gibraltar in Europe

But why all this information about tourism I hear you ask?

Because it is the tourism market that property investors in Morocco are targeting. On the one hand they are targeting those seeking villa and apartment rental and on the other hand they are aware that todays holiday maker is tomorrows second, retirement or holiday home buyer. And investors really are in Morocco buying up and developing real estate stock. Already six brand new coastal resorts are in the planning and development stages, money is flooding in from Dubai and Qatar based development companies and European buyers are purchasing off plan knowing full well that their real estate assets are appreciating even before they are completed and handed over. Buyers in 2007 have a chance to buy in ahead of the continued predicted rise in tourism and before Morocco is established in many peoples minds as a place to invest in real estate.

Consider buying off plan and flipping stock or better still, simply buying and renting to the tourism market on the Atlantic or Mediterranean coasts or in the mountainous ski resort of Oukaimeden. Rental income is earned tax free in Morocco for the first five years and those who hold property for ten years or more pay no capital gains tax when they resell, furthermore one is not subject to local inheritance tax in Morocco either. In conclusion - Morocco offers an investor a wealth of opportunity. Basically an investor needs to consider his preferred investment approach and his target market and then seek suitable real estate with room for growth or with prospects for returning good yields.

Rhiannon Williamson writes about property investment worldwide, to read more about property investment in Morocco in 2007 and beyond visit her site http://www.amberlamb.com

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Oct 23 2008

Have You Performed Your Real Estate Portfolio \’Check-up\’ Recently?

Published by admin under Investment Properties

If you invest in real estate, its worth your time to perform a periodic portfolio performance evaluation. NAR and OFHEO both recently released updated statistics supporting a current cooling of the housing markets across many cities nationwide. This national cooling could be significantly impacting the performance of your real estate portfolio. The questions you must ask are (1) whether, (2) how significantly and (3) what can be done if your current real estate holdings are being affected by these localized pockets of cooling.

Portfolio Compression Strategies
\r Real estate investor, David Robertson is the perfect example of this situation. David has owned an investment condo for the past 12 years. The loan on the property is paid off, and David has a $100,000 line of credit open against the $400,000 condo. During Davids years of ownership, there have been certain times that the condo has increased significantly in value. At other times, David has owned the condo through local economic periods that have caused higher vacancy, lower cash flow and more money out of his pocket.

During both experiences, David held true to his original buy and hold philosophy. It has paid off and today, David has nearly $350,000 available from this single investment. But, has Davids investment paid off to its full potential? To answer this question you need to explore Portfolio Compression techniques within a real estate portfolio.

Portfolio Compression within a real estate portfolio is a blend of property and market selection strategies which over time subscribe to the traditional buy and hold approach with a slight twist. The twist: Dont buy and hold the same properties in the same cities over the entire life of your real estate portfolio. In other words, dont subject your real estate holdings to the good and the bad of local market economics. When local economic conditions are good; buy and hold. Before or as local economic conditions change; sell and reposition your real estate holdings into other cities.

The 5 Steps to Portfolio Compression
\r An underperforming real estate portfolio can be improved. Here are the five steps to evaluating and getting your portfolio back on track:\r
\r 1. Evaluate the performance of your current real estate holdings
\r 2. Create a comprehensive personalized or corporate real estate plan
\r 3. Research local market conditions where you currently own investment property
\r 4. Choose cities across the country in which performance data is beating the average
\r 5. Establish your advisory team to successfully implement Portfolio Compression

Financial modeling of the traditional buy and hold real estate strategy versus modeling using Portfolio Compression techniques will clearly show you the potential for significant portfolio improvements.

Remember David? Modeling his portfolio conservatively and assuming he had used Portfolio Compression techniques over the past 12 years, Davids portfolio could be valued well over $3,500,000 today with cash flow potential in commercial real estate in excess of $75,000 per year. His current situation is not bad; however a little planning and ongoing guidance to implement a Portfolio Compression strategy plan, his results today could be significantly better than the $400,000 value and $14,000 per year cash flow he currently has. He is now implementing that strategy for the next 12 years.

Portfolio Compression techniques create (1) greater real estate portfolio diversification, (2) increased internal equity and (3) significantly greater cash flow potential for investors investing in residential housing, land and commercial real estate.

About the Author: Robert T. Swanson is the President & CEO of Signil Wealth Consulting Group, a national real estate investment planning and acquisitions company headquartered in Denver, Colorado. Signil specializes in helping individual and corporate clients maximize their real estate holdings using Portfolio Compression techniques. Signil can be reached toll free at 877.428.3030 or online at http://www.signil.com.

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Oct 22 2008

BMV Properties - One Key Tip to Help You Profit From Them!

Published by admin under Investment Properties

Finding BMV (below market value) properties is the way that much of the wealth that is being created in today\’s property market is being made possible.

In this article we will discuss one tip for finding BMV properties. This one tip alone can help take your property empire from being mediocre or non existent to bulging at the seams.

Over the past decade or so, there have been numerous T.V. shows about making money from property. Many have been focused on things like buying property at Auction. Because of this, at auctions in particular, we are now in a situation where property auctions have ceased to be the bargain place for finding BMV properties that they used to be back in the 1980s and 1990s.

These days you have to be able to attract below market value properties in as many different ways as possible. This article is focused on you learning how to become a \”Chain Angel\” and using what you learn to reap big profits, time and time again.

What is a property \”Chain Angel?\”

The term \”Chain Angel\” basically means someone who steps in and rescues broken property chains.

What is a broken property chain?

Generally speaking, a broken property chain is simply when you have a chain of buyers and sellers who are all dependent on someone else in the chain in someway. This can mean that they need to be able to sell their property in order to buy the one they want, but the person buying needs to sell theirs to buy it. A property chain can consist of just a few people, or it can be many more.

If just one person in the chain\’s house sale falls through, for whatever reason, then the whole chain can fall apart. This is what is known as a broken chain. And this is when the property investor/chain angel can come in and fix things by being able to buy the property whose sale has just fallen through.

In this situation the person who owns the property whose sale has just fallen through is in a panic because they could have wasted months with a potential buyer who has pulled out at the last minute, and if they don\’t get a sale soon they could be in a situation where the property they put on offer in on and perhaps even got to exchange on, is going to be put back on the market.

People in this situation need investors who can come in and buy the property quickly. They can\’t afford to wait and advertise the property again and have someone else put in an offer a few weeks down the line and be waiting around three months for a sale. They have to move now; otherwise they will miss out on the purchase of their dream property.

This is why the service of a property investor in this situation is vital to keep the chain running smoothly. Now you as the investor will obviously only be buying the property if it is below market value. Even though the seller will potentially be selling the property to you at substantially less than they had agreed with the last potential buyer, they can still see this as a great option. It allows them to still buy the property they want without having to apply for expensive bridging loans or other expensive options that might take a while to sort out and might mean they still will have to try and sell their current property anyway.

In this situation the investor is a simple, no hassle solution that means they can move on with their lives and cut all ties with their old property, quickly and easily.

If you want to be a successful \”Chain Angel\” one of the best things to do is to have great working relationships with as many estate agents as possible and to become well known in the area you are targeting. That way, when a chain breaks down (which can be quite frequently) estate agents and others will be straight on the phone to you to fix the chain, this way they don\’t lose out on their commission and the property in question can still be sold in the required time frame.

This can be a great way to find BMV properties. Some investors don\’t bother with things like auctions or ads in newspapers; instead they concentrate on building a good reputation and a solid set of working relationships in the community they are targeting.

Don\’t waste your money chasing profitless property deals. Carlton Johnson is a well respected author and webmaster specialising in helping investors make money in any type of property market. To learn more and to claim your free book titled \”The Five Rules of Property Success\” visit http://www.investment-property-guru.com

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Oct 22 2008

Making Money From Property With NO Capital

Published by admin under Investment Properties

Property in the UK has possibly been the most lucrative investment in the past 30 years. Apart from the property crash in the late eighties, property prices have been rapidly rising at about 10%+ per year for the past 18 years. I remember only 4 years ago, I made a staggering 20,000 in 3 weeks from buying a flat in a booming market!

These house price rises cannot be sustainable for much longer as first time buyers are struggling in their droves to get their foot on the property ladder. Couple this with increasing interest rates and uncertainty in the middle east and it could be that the golden age of huge house price inflation could be over for the next 5+years.

This may disappoint some people as many see buying property as a way of making money and growing wealth but the two problems they face are uncertain property market conditions and having the money in the first place to buy property.

In my opinion the easiest ways to make money are often the most simple and I am going to give you an insight into a property niche that could earn you tens of thousands of pounds for NO capital outlay whatsoever. So what is this property niche? It is Property Acquisition Consulting.

This is the secret and highly lucrative area of the property market that is making people a lot of money and is one of the drivers in the Uk property market. This niche involves finding and acquiring property on behalf of businesses and wealthy individuals with the sole aim of making businesses money, and saving individuals time and money.

There are so many companies and individuals who use Property Acquisition Consultants to help find them and acquire the right properties. In this time limited and on demand era, people have little or no time to do things say perhaps 15-20 years ago and hence hiring a property acquisition consultant makes perfect sense to a lot of businesses and people.

To give you an example of the sort of money a consultant can earn, if you acquired a property for a client valued at 2,000,000 then your fee can be upwards of 40,000! That\’s a lot of money in anyone\’s book and this is only just one deal!

The role of a consultant is pretty easy, they find and acquire properties for their clients and that is it. Obviously there is a little more to it than that but that is basically how it works. many consultants are on over 200,000+ per year and some are earning upwards of 500,000+ per year!

As you can see, it is a pretty lucrative market to make money in and the best part is there is no financial risk. So if you are looking at investing and making money from property then perhaps you should take a look at the role of property acquisition consulting as an alternative to investing in property.

To view more information, go to http://www.zone4business.co.uk\r Make money and build a business from property the smart way with NO capital =>http://www.zone4business.co.uk

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Oct 21 2008

Have You Registered Your Residential Rental Property

Published by admin under Investment Properties

Effective September 28th (2006), new law requires that property owners of residential rental property must register those homes with the County Auditor of the county that the property is located in (House Bill 294). Residential rental property means:

- real property
\r - one or more dwelling units leased or rented solely for residential purposes
\r - mobile home park or site where lots are leased for parking mobile/manufactured homes/RVs for residential purposes

Below is the information that must be registered:

1. The name, address and phone number of the owner; if the residential rental property is owned by a trust, business trust, estate, partnership, limited partnership, limited liability company, association, corporation or any other business entity, the name, address and phone number of the following:

* A trustee, in the case of a trust or business trust;

* The executor or administrator, in the case of an estate

* A general partner, in the case of a partnership or a limited partnership

* A member, manager or officer, in the case of a limited liability company

* An associate, in the case of an association;

* An officer, in the case of a corporation

* A member, manager or officer in the case of any other business entity

2. The street address and parcel number of the residential rental property.

3. Any owner of residential rental property who resides outside of the state must designate a person who resides in the state to serve as the owner\’s agent for the acceptance of service of process on behalf of the owner in any legal action or proceeding in the state. Any owner who designates an agent must also file the name, address and telephone number of the agent.

Also, in accordance with this Bill, all information is considered public record.

Last, the property owner is required to update the information (listed above) within ten days after any change in the information occurs.

Don\’t take this too lightly. Any owner failing to comply with the filing or updating of these requirements is considered in violation and is guilty of a minor misdemeanor.

Be sure and register your residential rental property now!

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Oct 20 2008

Realty Sector Is Now The New Profit Reality

Published by admin under Investment Properties

Construction and development segment is one of the fastest growing sectors of the Indian economy. This segment is augmenting investors. Even the real estate prices are augmenting fast, especially in metros and upcoming cities like Bhubaneswar, Kochi, Pune and Nasik. This rapidly growing market is maturing day by day as large numbers of people are taking part in it.

Flying high on the wings of this booming sector, property in India has become a dream for every prospective investor looking forward to dig profits. All are eying Indian construction and development sector for a wide variety of reasons:

* India is a growing economy with a continuous rise of 8 percent for last three years. This growth has increased purchasing power of Indians and created demand for reality sector.

* India is producing 2 million new graduates on an annual basis. This necessitates a demand for 100 million square feet of office and industrial space.

* The global perception towards Indian is changing fast. Presence of a large number of Fortune 500 and other major MNCs has created a feel good atmosphere in the Indian economy. This positive change will attract more companies to initiate their operational bases in India and will create more demand for corporate space.

* For investment purpose, India is a safe destination. According to a recent survey, 70 percent of foreign investors in India are making profits and another 12 percent are breaking even. This statistics is powerful enough to attract more and more FDI in Indian reality sector.

* The relaxed FDI rules implemented by Govt. of India last year has invited more foreign investors. After the decision of 100% FDI in this sector, real estate in India is seemingly the most lucrative ground at present. The revised policies are very much investor friendly and have allowed foreigners to own property. Now government of India dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares).

* Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its immense expertise in sectors like chemicals, apparels, pharmaceuticals and jewelery. In these sectors India can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the reality sector in near future.

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Paisawaisa as a finance specialist.

For more information related to finance community please visit: http://www.paisawaisa.com

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Oct 20 2008

Real Estate Market Due for a Correction?

Published by admin under Investment Properties

There is a lot of speculation and fear about the bubble in the marketplace. While bubble concerns are visible in some marketplaces in the US and perhaps Vancouver, is there a cause for concern for the rest of Canada?

The Normal Market

Similar to the stock market, real estate market also has a cycle. First, there is the annual cycle of certain months being slower months than others winter is slow time, summer is usually more active time for buyers and sellers. Second, demand & supply, interest rates will cause occasional adjustments in the marketplace.

It is important to note that a Bubble is not part of the normal market cycle. It is an artificial rise in demand which is unjustified by fundamentals usually fueled by speculation, misinformation and greed.

What is a Bubble?

In the dot com era, technology stocks were trading at extremely high price-earning ratios, which were not supported by market fundamentals that is, the stock valuation had a weak correlation to the profitability of the company; rather it was based on expectation (speculation). People expected dot com companies to be the waive of the future and were willing to finance it, these companies had no real income or collateral to back up the equity loans they were taking out. While some dot com companies made it big, like Amazon and Google, the vast majority failed. The technology bubble burst due to one simple reason, all of these companies came out at the same time causing an excess of supply with no corresponding rise in demand for the products it offered. Buying and trading was being done almost solely on dreams of future cash. That is the basis of almost all, if not all, bubbles.

What about Real Estate Bubble?

In contrast, real estate is a basic need everyone needs a place to stay. It has a finite supply land is scarce since no one is making anymore of it. In addition, artificial barriers introduced by government (greenbelt, conservation land, farm land) cause land to be even more scarce and push the demand up for other available land for development purposes.

Population is on the rise largely due to immigration, demand is boosted for real estate around business hubs (like Toronto, Vancouver, Edmonton, Montreal). Since land is more expensive in these areas, developers will likely address the higher density issue by building up (high rise condos) in these areas. And since the vast majority of people prefer a single family home and builders are expected to build less of it in these areas, these types of homes will also see a rise in price.

To sum up so far, a bubble is fueled by artificial demand unjustified by fundamentals (normal supply and demand) people begin to buy and sell based purely on speculation with no current market justifications for the higher demand. Real estate has a consistent rising demand and a limited supply which is unexpected to change anytime soon.

Its all up for Real Estate?

Does this mean that the housing prices will not fall, absolutely not. As part of normal real estate cycle, prices will occasionally adjust to reflect the current supply and demand situation of the market.

Lets first look at the crash of the 90s to see if similar fundamentals are visible in todays market place.

Crash of the 90s

Over 30% of the people buying in the Toronto area in the 90s were investors, with consistently rising interest rates, these investors could no longer afford the financing costs which caused them to either sell or be foreclosed on by the banks, which caused an excess supply of properties (especially condos) in the marketplace; the excess supply caused the prices to fall. The falling in prices caused investors who had crystallized their losses recently to stay away from the market place (further lowering demand). And end buyers noticed the falling trend and decided to wait a little longer hoping that the property values would drop further and properties could be picked up for a bargain. This waiting game lasted years.

Last year, only 19% of the condos in Toronto were rental units (according to CMHCs Housing Market Outlook from the second half of 2005) and vacancy rates are dropping. This is because more people are buying for themselves and not on speculation. So even if the rental markets slowed and vacancy rates started to rise, the real estate market is not likely to be flooded like they were in the early 90s.

Affordability

A major factor that caused the adjustment in the early 90s was the interest rates. In May of 1990 the interest rates were a whopping 14.21% (according it CMHC), making mortgage payments $11.89 for every thousand dollars of your mortgage. This would make a $400,000 mortgage cost $4,755.97 per month. You can currently get a 5-year mortgage at a rate of about 5.25% or $5.96 per thousand dollars on your mortgage. This means that a $400,000 mortgage today will cost you $2,383.67 per month. That means that the effective cost of owning a house is half the amount that you would pay back in 1990 and yet the average price is only 5%-10% higher now than it was in 1989.

Conclusion

The adjustment in the early 1990s was a response to too many speculators and excessively high interest rates. In the late 90s and until now there has been another adjustment to account for the housing markets being under valued in the 90s and consumer attitudes changing to acknowledge that homes were affordable again. Now as prices are starting to reach a level where affordable houses are affordable, we are likely to see prices moderate with slower increases in price and the occasional peaks and valleys that represent a normal market.

About the Author: Ravinder Tulsiani, CIM, FCSI. After graduating as a law major, Ravinder spent nearly a decade in the financial industry as a banker, securities broker and Chief Compliance Officer. Ravinder left the securities industry in 2005. He is now exclusively focused on real estate investing and holds properties throughout Canada and overseas. http://www.tulsianiinvestments.com/

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Oct 20 2008

Become A Better Real Estate Investor By Developing The Ability To Accurately Appraise A Home\’s Value

Published by admin under Investment Properties

Have you been thinking about getting into real estate investing? If you\’re serious about becoming a real estate investor, one thing you really need to develop is the ability to appraise a home\’s value. If all you\’ve bought before is a car, and you\’re used to seeing a NADA value placed in a book like you get with car dealers, forget it. There are no values placed on a home for sale apart from the one you work out for yourself. This is why it\’s often best to stick to one or two areas for your real estate investing, at least initially. Doing this makes it easier for you to get a \’feel\’ for what a house is worth, based on other comparable houses that have recently sold in the area.

So if you want to develop your appraisal skills, here a few ideas to get you started. Firstly, decide what appraisal method you plan to use and stick with it. Many people appraise a house based on the value of similar houses in the area. In that case, you better make sure you get to know the area inside out and know exactly what sort of numbers you\’re dealing with.

Another method of appraisal is to look at the potential income of the property. In that case, you need to consider all the factors involved, including the potential for vacancy, required maintenance and how attractive the house appears to a potential renter. If you want to appraise the house based on its potential value after you\’ve carried out improvements, then make sure you have a very good idea of what those improvements are going to cost you in both time and money. Don\’t just guess; have real, solid numbers to work with. Otherwise you could find yourself pouring a lot of money into the house without the prospect of recouping that with a profitable sale.

You also need to know the type of value you are going to use in getting an appraisal. You need to learn the difference between tax assessed value and appraised value. The different rules and laws in your state will determine the tax-assessed value of a property, and it\’s based on information such as the value of the land and the level of improvements made to that land. An appraised value is basically an estimate of the probably sale price of the property if it was sold on the open market today. This is basically along the lines of the NADA value you see when you go to a local car dealer. It\’s determined from comparison sales, which means it\’s based on the sale price of other similar houses that have recently been sold in the neighborhood.

For more valuable information on commercial real estate investing try visiting Successful-Real-Estate-Investing-Tips.info where you will find real estate investing resources and tips on making money with rental property, flipping houses and forclosures.

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Oct 20 2008

Retail - How To Tell What Is Up And Coming

Published by admin under Investment Properties

What do you want to know?

Maybe you have a few questions about how to know the difference between what is retail now and what will be retail in six months. Say you are in a market where progress is going to explode! In fact, it is going to happen very rapidly!

Say you also have a couple of properties you are looking at, but right now they are retail. In fact, with one of them the seller may carry back some things but what you really want to know is what the difference is between retail now and retail later?

If you are talking about current land, then you should have no problem paying current retail price for vacant land in an area that is exploding. In fact, you know it is going to get crazy! Another buyer wants to have a strip mall on the front part of it, and office condos on the back.

What do you need to do?

Whoa!

You need to put in the comment section at the bottom this property if it is in the immediate path of progress at a rapid rate. This has the potential people!

In addition, you really should take a look at to see if this land comes along with some owner financing. More importantly-you need to ask the right questions!

In fact, there are a couple of things you need to ask.

Number one, the seller financing has got to be where they will take a second and allow us to go get a new one first. Now say they already have that on there and it says seller may carry all but 50%. Keep in mind, the seller may carry is one thing. But you should not put up a 50% down payment and neither should anyone else. What you should do in this instance is borrow the money on the property or- plain and simple-you are not buying the property.

Does that make sense?

Do you see the difference between retail and retail in six months in this case? You shouldn\’t because there isn\’t any difference. The key ingredient here is whether you can get the right kind of seller financing or not on either of these parcels or any other in that area.

Of course the owner will want to negotiate. And don\’t worry about going through a realtor broker-it is all right! At this point, it should be very easy for you to ask about seller financing and half the time they don\’t know. And remember you are not looking for long term financing!

When it comes to real estate investing, I highly recommend information from Ron LeGrand. For valuable information regarding investing in homes visit RonLeGrand.com. You can also find useful investor resources in the free newsletter at MillionaireMakerNewsletter.com

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Oct 18 2008

Cash On Cash Return, The Formula And Calculation

Published by admin under Investment Properties

Cash on cash (CoC) provides an easy way for real estate investors to compare the profitability of similar income-producing properties or gauge it against another investment opportunity quickly.

Cash on cash, however, is not a particularly powerful tool for measuring the profitability of rental income property and currently gets less attention in real estate investment analysis than it used to receive some years ago.

One shortcoming lies in the fact that cash on cash return does not take into account time value of money. Cash-on-cash return must be restricted to simply measuring a residential income property\’s first year cash flow and not its future year\’s cash flows.

Nonetheless, cash on cash is not without validity and still offers seasoned and beginning real estate investors a benefit that has always attributed to its popularity.

Cash-on-cash return measures the ratio between anticipated first-year cash flow to the amount of initial cash investment made by the real estate investor to purchase the rental property. Hence, cash on cash is always expressed as a percentage.

The \”first-year cash flow\” (or annual cash flow) is the amount of money the property is expected to generate during the first year of operation. The \”initial investment\” (cash invested; sometimes called cost of acquisition) is the total amount of cash invested including down payment, loan points, escrow and title fees, appraisal, and inspection costs.

Okay, let\’s start with an example and then make the calculation.

Suppose you are interested in purchasing a property with six units that each pays $1,000 per month rent. You estimate the first year\’s operating expenses to be $28,800. You are planning on a new mortgage with $126,000 down payment, loan points of $2,940, and a monthly payment of $1,956. You estimate that your closing costs (escrow, title, inspections, and appraisal fees) will be $2,100.

Formula: Annual Cash Flow / Cash Investment = Cash on Cash Return

In this case, you would need to make five calculations (to determine Annual Cash Flow and Cash Investment) before you can compute for cash on cash.

  1. Annual Rental Income: (6 units x $1,000) x 12 = $72,000
  2. Net Operating Income (NOI; income less expenses): $72,000 - 28,800 = $43,200
  3. Annual Debt Service (mortgage payment): $1,956 x 12 = $23,472
  4. Annual Cash Flow (net operating income less payment): $43,200 - 23,472 = $19,728
  5. Cash Investment (down payment + points+ closing costs): $126,000 + 2,940 + 2,100 = $131,040
  6. \r

    Calculation: (Annual Cash Flow / Cash Investment = Cash on Cash Return) $19,728 / $131,040 = 15.06%

    Now that you know this specific investment opportunity yields a 15.06% cash on cash return, you can compare it to similar properties, or alternative investments such as a T-Bill rate, and decide whether or not to proceed with a purchase.

    About the Author

    James R Kobzeff is a real estate broker and developer of ProAPOD Real Estate Investment Software - Rental property cash flow, rate of return, and profitability analysis.

    Real Estate Investor \r Software - So those just starting to invest in real estate can determine whether the property makes money before invest.

    Mortgage and Financial Calculator - Compute hundreds of mortgage, time value, and cash flow computations in seconds!

    Preview our software reports and screen shots at http://www.proapod.com

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