Adding Pictures to Your Real Estate Analysis has Never Been Easier!

ProAPOD recently released an update to its platinum grade V.10.0 real estate investment software with sweeping changes in the way the software solution handles pictures.

ProAPOD’s real estate software solutions have always provided an excellent picture function that enables users to insert a picture on the coversheet and marketing package of the real estate analysis with one-click. It has been one of the hallmark features of all three software solutions, i.e., ProAPOD 4.0, ProAPOD 6.0, and ProAPOD 10.0.

The recent update to ProAPOD 10.0, however, takes it one giant leap forward.

Reports in 10.0 that Now Enable a Picture

  1. Cover Sheet – A coversheet is page one on your real estate analysis and as such introduces the investment property to the customer, partner, colleague, or lender whom you are presenting the rental property. A picture is currently enabled.
  2. Marketing Package – This is the report that highlights the property enough on one page so readers can quickly determine whether the property might be of interest and worth pursuing. A picture is currently enabled.
  3. Executive Summary – This report provides more detail about the property typically not included in the marketing package’s general overview of the property such as the property’s construction, utilities, area, and highlighted features for example. A picture is now enabled in this update.
  4. Photo Page – This report allows you to show additional exterior and/or interior pictures of the property. This page and picture function is now included in this update.
  5. Comparable Sales – This report enables you to compare the subject investment property to similar income properties that recently sold. A picture of each comparable sale is now enabled in this update.

If ProAPOD 10.0 is currently the real estate investment software you are using, be sure to update this latest version to take advantage of the newest picture functions. Preview all these reports at http://www.proapod.com/ReportsPage.htm

10 Things to Look for When Buying Investment Real Estate

Once you make the decision to buy real estate investment property, there are a number of factors to consider and at least 10 things you want to look for. In this article, we’ll examine what those ten things for real estate investment property are along with a brief explanation.

1) General location – Location, location, location is the mantra in real estate. Unless the investment property is located in an area that will sustain or boast rents, and in turn be able to be sold for a profit, forget it.

2) Site improvements – Does the property require repairs that might eat away at your cash flow, or are there repairs that can be made that would substantially increase your cash flow and return?

3) The lease form used – In the case of a commercial building are you locked in to a favorable or very unfavorable lease? In other words, are you buying a favorable or unfavorable income, and for how long?

4) The income produced – How much income does the income property generate and is it realistic, and can it be sustained? Is there room to increase the income?

5)  Type of expenses – What does it take to keep the property operational? Is there anything out of the ordinary, and is there a chance that some expenses can be reduced or eliminated?

7) Management requirements – Will the rental property require a professional management company, perhaps a resident manager, or is it something you can handle.

8) Financing – Can you leverage the property? What about the rates and terms will you and/or the investment property qualify for the best loan possible? What are the loan payments?

9) Depreciation benefits available – How much of your income can you defer by depreciating the property?

10) Unique features – Is there anything about this particular investment that sets it apart from other real estate investment opportunities? Perhaps its location, construction, or maybe it offers great upside potential.

Editors Note: Be sure to check out the newly updated version for ProAPOD 10.0 recently released before you create your next real estate analysis. It now includes many more picture options and other features that you will find incredible.

Considerations When Deciding Whether to Manage Your Rental Property

One of the more important questions you need to answer before you make your first real estate investment is “just how involved do I want to become in the operations of my real estate investment?”

For unlike decisions you might have made in the stock market, which was whether to buy or sell and did not entitle you to make any decisions regarding the operation of the company, with investment real estate, you are in control and must now make the decisions that will affect the operation of your investment.

Once you invest in real estate, you become the CEO of your own individual real estate investment company so you have to decide just how involved you want to become.

Factors to Consider

How much time do you want to spend? Foremost, do you even have any free time to spend? You may have a full-time job with zero hours to spend. On the other hand, you may be retired and have nothing but time to spend; as a retiree, perhaps owning a real estate investment property is what you need to keep active. You get the idea.

How much stress can you handle? Maybe you have the time but maybe you hate the thought of talking to your tenants about repair issues, rent increases, late payment issues, agreement violation issues, and so on. In other words, maybe you just dread the thought of confronting tenants, period.

How much are you willing to sacrifice to maximize your profits? Yes, we all want to become wealthy, but that’s not likely to happen unless we inherit a fortune. So we should accept the fact that we either devote the time and deal with the stress or leave all the management responsibilities of our rental properties to someone else.

Types of Management Available

If you own rental income property and prefer to leave it to someone else then you have two phases of management open to you: resident management or property management.

A resident manager is someone who is hired that lives in the building and will take care of the day-to-day problems that may arise in owning rental income property. He or she should spend a lot of time at home, be conscientious, maybe something of a handy person, and should get along with the other tenants in the building.

In this case, you might want to rely on the judgment of the previous owner or just pick an individual (or couple) who is of retirement age and is usually there, or can perhaps find a young married couple happy to get a break on their rent.

A second choice would be a professional management company.  Their job would be to find tenants, show the apartments and negotiate leases, collect the rents, pay the bills and mortgage payments, keep bookkeeping records, make sure the building and grounds are properly maintained, and so on. In other words, to run the property as you would.

How Much Management Do You Want?

Okay, now that you’re acquainted with the management-intensiveness of investment real estate, and see that you can become as active or inactive in the operation of your rental property investment as you choose, how much management do you want?

Here’s a suggestion.

If you are able to find the time and can cope with the stress level, try managing the property on your own. If you’re working with a knowledgeable realtor who specializes in investment real estate, he or she can give you enough guidance for you to become familiar with the operation and management of your property. Other wise, if this is not your first venture into real estate investing, or you simply cannot find the time to manage it yourself, then consider hiring a professional management company.

The important thing is not to let the thought of possible management problems keep you from investing in real estate. Rental property management and the problems of management can be avoided.

The Benefits of Investment Real Estate Ownership

Since placing capital in real property with the expectation of generating a return is the hallmark of real estate investing, in this article, we want to discuss the returns an individual investor can expect to receive from both monetary and nonmonetary sources associated with owning investment real estate.

Monetary Returns

These are benefits that can be directly measured by costs or returns of that component. In other words, how much money (in dollars and cents) can be made by owing the rental property?

  1. Income – Rental income that remains after operating expenses, debt service, and taxes is cash flow that becomes your income. There are many factors that influence the rental income you might receive over time such as the competition in the market, or a change in the market that dramatically alters the market and causes a wide disparity between what renters in the past are now willing to pay at this point, so there are no guarantees. Still, when cash-in survives and exceeds cash-out, it’s money in your pocket.
  2. Appreciation – This results in what may be categorized as real or nominal increases in value of the property. Nominal increases in value mean a property has increased in absolute dollar terms. Real increases in value occur if an asset increases in value at a rate that exceeds the appropriate measure of inflation in the economy or market basket that is being used as a measure of purchasing power. Appreciation may be realized through either the sale, other disposition of the asset, or by borrowing against the increased value of the asset.
  3. Financial leverage – This monetary return results in making money by using borrowed funds (other people’s money) that cost less than the return they enable, thus resulting in magnifying the rate of return on investor equity and simultaneously enabling the investor to control a much larger investment than would be possible without borrowed resources.

Nonmonetary Returns

These are benefits that are less obvious but can be measured by personal investment objectives and opportunity costs associated with the particular benefit.

  1. Pride of ownership – Direct ownership and control of an investment in real estate enables one the opportunity to control one’s destiny through managing and making one’s own decisions about that investment.
  2. Security – There is a measure of security knowing that an investment is under the investor’s control. Controlling the ownership of land and improvements at a specific location to insure uninterrupted tenure at the same address for a business, for instance, or as in estate building, financial security upon retirement.
  3. Diversification – In this case, an investor may purchase real estate as an investment for portfolio diversification in order to spread risk by having a diversity of investments among different investment types.
  4. Tax shelter – Finally, it should be noted that most real estate investments involve tax shelter advantages arising from opportunities to defer tax on income through depreciation and a variety of tax credits.

Those who are interested in maximizing their wealth build fortunes by real estate acquisition, development, and management (real estate investments are a source of wealth). But as you can see, there are returns from both monetary and nonmonetary sources. And both benefits, after all, do play a role in selection of real estate as an investment.

Why Not a Proforma Income Statement With 20-Year Projections?

There’s an ongoing debate amongst analysts and real estate investing software developers regarding proforma income statement projections.

Whereas some would argue that proformas should provide twenty-year financial projections, others claim that ten-year projections are sufficient – if not better because trying to project twenty years out can be dangerously misleading.

In this article, we’ll look at the proforma income statement and see which claim might be the most reasonable.

Definition

A proforma income statement is used in a real estate analysis to project a rental property’s revenues. The concept is straightforward.

Based upon the financial performance of the rental property and then using a variable to make projections into the future, a proforma income statement shows the real estate investor what amount of cash flow and rates of return might result on a year-to-year basis over time based upon those variables.

Illustration
Example

Assume that a property currently produces $30,000 gross operating income, operating expenses of $12,000, and a net operating of $18,000 (income less expenses). In this case, the analyst seeks to determine the following year’s net operating income based upon an educated guess for next year’s income and expenses.

We’ll say the analyst speculates that income revenue will annually increase 5% and the operating expenses 4%. Here’s the calculation required for the investor to arrive at the net operating income at the end of next year.

Revenue (next year) = $30,000 + (30,000 x .05) = $31,500
Expense (next year) = $12,000 + (12,000 x .04) = $12,480
Net Operating Income (next year) = $31,500 – 12,480 = $19,020

This is the procedure used for each subsequent year extending out 10, 15, or 20 years until the rental income proforma is populated. The real estate investor simply creates a projection of the rental property’s financial performance according to the variables (i.e., vacancy allowance, income, operating expenses) that he or she desires.

Benefit

Of course, a pro forma is very helpful to a real estate investor. Anyone involved with real estate investing understands that real estate is not considered liquid and as such, a property’s performance must be considered over the long run.

This is the reason that analysts and investors create a proforma income statement for rental property evaluation and in turn rely on it to help them make their real estate investment decision.

The Catch

A proforma income statement is 100% assumptive.

It merely assumes what the income, vacancy rate, operating expenses, and future selling price produced by a property might be over time. The long-term cash flows, rates of return and sales proceeds available to the property’s owner in the future are conjecture because no one really knows what the future holds.

Who, for example, could have predicted the slide that real estate has taken over the past several years?  If the brightest and smartest on Wall Street or Washington couldn’t, then how could a real estate agent or individual investor in Los Angeles, Tampa, or De Moines know what the future holds?

Here’s the point.

Yes, analysts and real estate investors should rely on the proforma income statement to evaluate a rental property’s future financial performance because it does provide a concise revenue projection needful for real estate investment decisions.

But it’s this author’s opinion that a proforma – because it is conjecture – should not extend beyond ten years. After all, real estate investing provides enough risk already without adding even more risk.

 

ProAPOD 10.0 Updated With More Picture Functions

ProAPOD® Real Estate Investment Software is pleased to announce that it’s platinum-grade real estate software solution ProAPOD 10.0 has been updated and now includes a ton of picture options.

1) Photo Page – now you add up to six additional photos of the property that you’re analyzing and include them in a NEW report called the Photo Page. See a sample at http://www.proapod.com/PDF/photo.pdf

2} Comps – now you add a picture for each comparable sale. That’s right, now you can include a picture for each property you choose to add as a comparable sale (up to 10 in all). See a sample at http://www.proapod.com/PDF/comps.pdf

2) Executive Summary – now you can add a picture of the property (along with your company logo) to your executive summary. See a sample at http://www.proapod.com/PDF/executive.pdf

There’s more!

With this newest real estate investment software update, you can select the category, type, and subtype of property you’re analyzing and then have it automatically posted it in the Cover Sheet, Executive Summary, and Marketing Package.

For example,

If you select Residential as a category you can select Multifamily or Residential Income as a type, and in
turn, Garden/Low-Rise, Mid/High-Rise, Mobile/RV Community (etc., or whatever you choose), or Single Unit (SFR or COndo) or Duplex/Triplex,Fourplex )or whatever you desire as a sub-type.

If you select Commercial as a category you can select Office, Industrial, Retail, or Shopping Center as a type, and in turn,
a variety of sub-types, including Medical Office, Flex Space, Self/Mini-Storage Facility, Warehouse, Restaurant, Street Retail, Strip Center (etc., or whatever you desire).

If you select Mixed Use as a category you can select Multifamily-Office, Mulifamily-Retail (etc., or whatever you desire).

Here’s the benefit.

You now can broadcast to others the category and type (plus sub-type) of property that you’re presenting, so there’s never a question…every customer, colleague, and lender
will know exactly the type of property you’re presenting because your real estate analysis tells them. And it’s easy…you just make a selection on the form!

There’s more.

ProAPOD’s 10.0 toolbar Picture function has added a control that makes working with pictures easier than ever. With one simple click you can add a picture to the Cover, Executive Summary, and Marketing Package all at once.

This Update is FREE, but here’s the catch.

1) You must currently own ProAPOD 10.0 (or the older version 7.0).
2) Your account must be “active”. If not, simply renew your membership from your account page. Click “renew”, follow the online instructions, and your updates will be waiting for you the next time you login.

What about ProAPOD 6.0 users? No problem, simply UPGRADE to 10.0. From your account page, click “Upgrade to 10.0”, follow the online instructions, and your downloads will be added to your account along with one year of free updates. So you can get this powerful new update AND a renewed membership. Best of all, you can upgrade to ProAPOD 10.0 for just $129.95.

RESTRICTIONS

1) This “Update” will NOT work on a computer that does not already have ProAPOD (7.0 or 10.0) on the computer.
2) The “Upgrade to 10.0” will NOT work on a computer that does not already have ProAPOD (6.0) on the computer.
2) ProAPOD 4.0 users cannot upgrade to 10.0.

Please report any problems immediately.

Thank you for choosing ProAPOD® Real Estate Investment Software.