Andrew Vaughey, Real Estate Investor

Author: Joel Teo

There are basically two ways you can make money from your real estate investment, capital appreciation and monthly rental. In this article we will assume that you are a serious real estate investor and are purchasing this property to rent out and use mortgaging to control 100% of the property with a 30% cash down payment. Note this article does not deal with the no money down methods of property investment which will be covered in a separate article. This article aims to show you how to identify a good real estate investment that can provide you with a good monthly revenue stream and cashflow.

Firstly, ascertain how much cash you have in hand initially. This amount will determine how much financing you can get and the maximum amount of real estate you can control with your initial sum. Taking our example above, if we have $30,000 in hand, we can use this to control a property worth $100,000.

Secondly, once you do a rough estimation of your initial down payment sum, spend some time going to all the mortgage brokers, finance companies and banks in your area to see if they are willing to loan you money. You would probably need some credit reports and other documentations so as to convince them of your credit worthiness. Some things you would want to learn from your financers include, the interest rate and whether its fixed or floating, the monthly instalment size, whether they have special short term mortgages in case you should identify a good property to flip and re-sell. The financing element of a real estate investment deal is very critical and spending some time shopping around for the best bang for your buck would be a prudent move.

Thirdly, now spend some time peering intently at the classified advertisements. You want to ascertain the properties with the best rental yields as if you want your real estate investment to outperform the national rental yield, you would want therefore to look at properties in areas that are high in demand and look for bargain real estate investment deals. Another good way to figure this out is to ask someone who is knowledgeable in property. Ask him for places with good locations for the purposes of rental. A quick tip to note, places near the sea and on a mountain always fetch better prices than any other properties. Thus even commercial properties with a sea view command a slight premium over properties that do not have a sea view.

Fourthly, now after identifying on paper the bargain properties within your budget, start making appointments with real estate agents to look at properties on your list. If you make it clear that you are looking into property investment and that you might be a frequent customer, then there is a chance that these real estate agents would welcome you and inform you of other real estate bargains that you might be not aware off.

Fifthly, always make it a point to be early for the appointment and spend some time observing the surroundings of the real estate in question. Things to take note off include, a bad neighbourhood, no human traffic if you are looking at a commercial property, inaccessibility, no car porch or parking facilities or something that your intuition tells you is not right with the property. This is even more so for bargain properties and auction properties as there might be something very inherently wrong with the property. Spend sometime talking to the neighbours and ask them about the neighbourhood and then ask them if they know of anything wrong with their neighbours property.

If you are purchasing a run down property, you would want to bring along a contractor and building engineer or architect to inspect the property with you so that you can estimate how much you might have to spend to spruce up the property and later rent out or sell. Once you have ascertained the real estate investment is good for your purchase, start asking about rental yields of property in the area and what price the agent will be able to rent out your property.

Finally, once you have the property price, the mortgage instalment payment, the rental yields, and operating expenses, spend some time generating a spreadsheet to estimate whether your purchase is viable from a monthly cash flow perspective. You want to find the property with the best cash flow for your real estate investment. Once you find one property like that, spend your energy finding other similar properties and you will start seeing your monthly income rise.

Note that generally you are more likely to encounter surprises as opposed to surprise income, so factor this into your calculations. Remember to keep some money in your bank account to take into account things like changing of tenants where a month may go by without any rental coming in and you must be able to pay the monthly bank instalments. Also take note of where in the rental cycle you are purchasing the property, a property that may be in positive cash flow now, may not be so in the next few years.

Author: Leroy Calstard

In the last 20 years or so, hundreds of people have found that investing in real estate can be challenging but profitable. While some may have entered the business with the idea that it is a way to make some easy money, the successful entrepreneurs knew from the start (or know now) that making a profit from real estate investments requires some work. One of the most attractive factors in real estate investing is the possibility of acquiring property with a small investment, sometimes just a fraction of the actual property value. So, to some this may seem like an easy way to build up the bank account. But properties purchased with a small amount of money can require a great deal of time and labor from the investor.

Most experienced real estate investment professionals will tell the beginner to be prepared for learning a lot of new information. Investing in real estate can be a complex process, often taking years to become a comfortable, everyday way of making a living. As these pros know, there is one thing that is easy in real estate investing - losing money. Any business venture should begin with some good, old-fashioned planning. A bit of time spent writing down goals will go a long way toward keeping the venture focused. But writing “Make A Million Dollars” as the first goal may not be wise. It is very important that the goals and the plan are realistic. Remember that the real estate market changes all the time. It will be necessary to adjust the plan and the goals to fit real prices and availability of property.

A few years ago several financial advisers and investment counselors used one-year, five-year and ten-year plans as the basis for sound investing or business growth. These basic concepts can still be quite valuable for someone starting in real estate investment in costa blanca. One of the key factors in these plans will be the detail. It will probably not be enough to simply state that the goal is to make thousands or millions of dollars buying and selling a lot of properties, for example.

One key detail that should be included in any investment or business plan: How much capital (starting money) is available? This will help determine the level at which the venture can begin. Limited funds may lead to a small home that needs a lot of work as the first investment. In addition, it may be necessary to use value in the family home as a means of getting investment capital.

Some real estate investment programs focus on the possibility of putting no money into the venture, except for some required fees and costs. These opportunities are out there, but this system of investment is a bit risky and takes some extra study to reach a successful conclusion. When beginning as a real estate investor, be prepared to take some risk. From the start, it would be wise to consider if you want to hang on to your capital at all costs or risk a bit more for the chance of making a larger profit.

Author: Joel Teo

Real Estate Investment Financing is simply industry jargon for a real estate investment loan. In a bad property market where rental yields are low, the most dreaded word that you can say to a real estate investor is negative equity. So what is negative equity? It is a situation which arises when the foreclosed value of your property is less than the price that you paid for it and in certain states like in New York, the mortgagee (the bank) can then bring a deficiency action against the owner to reclaim the difference.

This article will therefore go on to examine three ways to prevent a negative equity situation in the longer term.

The first key to preventing yourself from a negative equity situation is always look at the downside of any investment and analyze the rental yield of your property in a bad year. In real estate investment terms, this means that you look at the average rental yields of your property in the lean years to see if it drops below your monthly instalment for your mortgage repayment. I hate guessing, so the best way is to go to a real estate agent and ask them to generate a graph and then do your own analysis to see if your property rental would go below the amount that you are paying for your monthly mortgage instalment.

The second factor to consider is the price that you pay and the monthly instalments. Many people during a property boom, tend to overpay for their property and as a result, when the economy turns around, the changes of a negative equity situation arising is quite possible. Excessive exuberance in the real estate market like in the stock market can make you more likely to buy the property at an all time high.

The third factor is the rebound of a sector. Spend some time looking at statistical data. Which property sectors rebound more quickly than others in response to a good market and economy? By choosing your property investment right, even if the market is bad, your chances of a turnaround are better than the national average. This is also an application of the common adage of “making the best of a bad situation” in real estate investing.

In conclusion, by spending some time to consider the three above contributing factors and spending some time to analyze a property investment can save you much heartache later and prevent you from falling into a negative equity Real Estate Investment Financing situation.