Buying An Investment Property

You may have thought about it at one point or another: purchasing a rental home, condo, or townhome, and "making the plunge" by investing in real estate. However, with all of the recent headlines and the housing downtown our country has seen, many investors have simply been scared off entirely. Today, let’s took a look at some of the benefits of investing in real estate.

First of all, when you buy rental property, realize that over time, real estate surely has gone and will continue to go up in value. Granted, the last few years have been extremely difficult with many markets seeing prices slide. However, over time, real estate has slowly but surely gone up in value. And there is no reason to believe that long term, over time, this trend will not continue. As an investor, you will be able to make money on the future appreciation of your property.

Secondly, you often times are able to make monthly cash flow. The tenant is paying you monthly rent, and that monthly rent pays off all of your expenses on the property (mortgage, taxes, and insurance.) What is left over, is simply called cash flow.

Third of all, you will be paying your loan down over time. Or should we say, your tenant will be paying down your loan for you on that property over time. Often times, borrowers are able to put a 30 year fixed rate loan on a property (and still have it cash flow.) As a result, each month, your mortgage balance is decreasing. If you put a 15 year mortgage on a property, you will even be paying it down more quickly of course.

Lastly, you are able to depreciate that rental property, thus saving you on your taxes each year. This is one of the most often time missed benefits. Depending upon the ability of an investor to qualify for these tax benefits (income, etc), the tax benefits can truly be outstanding.

In conclusion, there are four primary benefits to buying investment property (whether it be a home, townhome, condo, duplex, etc): cash flow, principal pay down, appreciation, and tax benefits. Realize that historically, investing in real estate has proven to be an awesome long term wealth building strategy. In spite of this recent real estate market and correction, there is no reason to believe things will not continue in a positive direction. There are obviously no quick solutions, but real estate investing has helped make many "average joes" from around the country into millionaires.

Ryan O’Neill is a licensed agent with RE/MAX Advantage Plus. As the founder of The Minnesota Real Estate Team, Ryan and the team help clients buy and sell Minneapolis Real Estate and Minneapolis Homes for Sale.

Article Source: ArticleSpan

Windows 7 Permissions

I use Windows XP and thankfully never have had to contend with the “permission” issues introduced by the Vista and Windows 7 platforms. In both cases, you must tell Windows that you have the “permission” to change folders and files. If you search some of the forums where this is discussed, you will discover that few (if any) of those using either Vista or Windows 7 like this feature in the new platforms and often go back to Windows XP because it does not include this “permission” feature.

Here’s the problem: When you attempt to use ProAPOD in either Vista or Windows 7, the file is set by default to “read only” and as a consequence you cannot “save” your work. This is not the fault of ProAPOD, but rather the “permission” settings in Vista and Windows 7. As a result, you must first give yourself “permission” over the folder and files before you change ProAPOD from “read only”.

I wrote instructions on how to do this in Vista in the following article: http://www.proapod.com/Articles/vista-perm.html

Another site has posted instructions on how to do this in Windows 7 at: http://www.blogsdna.com/2159/how-to-take-ownership-grant-permissions-to-access-files-folder-in-windows-7.htm . This same site also provides a small file that you can download free that will enable you to “take permission” from a menu at: http://www.blogsdna.com/2173/add-take-ownership-option-in-right-click-context-menu-of-windows-7.htm. It appears to be solid information, but again, I do not use Windows 7 so I personally have not implemented it.

If you are encountering “permission” issues in Vista or Windows 7 I strongly recommend that you read these articles because I am not going to be much help to you.  I know it’s a pain, but as one posting in a forum stated, it’s the reason why many have opted to return to Windows XP.

Why Investors Are Drawn To Commercial Real Estate Investment?

To invest in commercial real estate means the opportunity to make a large sum of money. Commercial investments include properties that do not comprise single-family homes. This usually refers to apartment buildings, office spaces, educational institutions and all other buildings that are not constructed for individual family use. It is a great way to make money but for this you must know the ropes of investing in the commercial market. Commercial real estate includes the land where a building may be built or even land space with a building already existent.

Investing in commercial real estate is a lot of money with respect to the investment made and the returns enjoyed and this is a safe method of investing compared to the other options available in the market. Every body wants to get into the business of investing to reap the profits it provides. But it is necessary to do this in the right manner. Learning the tricks of the trade is essential. The real estate investing program is a great way to learn the about the different types of investments and also the different ways. This will help you if you are a beginner or even if you already know a little bit of investing but still want to learn a bit more, before actually investing your hard earned money. At the end of the day it is your money that you are taking a risk with and it is always better to be prepared.

Another reason for the popularity of commercial investment is the ability to build equity or raise money by receiving rent or carrying out your personal business. So depending on the reason for investment, the method and risks involved will vary accordingly. So first be clear on why you wish to invest in the commercial property before actually making the investment.

People also invest in the construction of commercial property for their own business because you are then in a position to gain from the equity. As you are the owner of the building, you will not be concerned about the owners rules and regulations. No one can impose any restrictions on the way the property is being used and you are free to do as you please. These are the advantages enjoyed by the owner or investor of a commercial real estate as compared to that of a rented property. The liberty the owner enjoys can never be compared. The building is at your disposal to do what you wish with it.

The above are few of the benefits of investing in commercial real estate. All this helps to make this a more inviting proposition as compared to other investment opportunities. But keep in mind that any type of investment must be done only after careful study of the subject matter. The investor must be well versed with the different opportunities available to him and also the risks and the extent of the risks. He must make a careful and well-informed decision. The selection must also help the investor in meeting his requirements.

Real Estate Investments are flying in our market like hot cakes….Why?, because we have the formula for YOUR Real Estate Investing Success. Unless you don’t want a great deal, then do not visit http://www.realnetusa.com.

Article Source: ArticleSpan

ProAPOD Real Estate Investment Software – Resolving Vista Security Issues

ProAPOD Real Estate Investment Software has been providing quality real estate investment software solutions without incident to agents, investors, and other real estate professionals since 2000.

In the early years, however, with MS window platforms XP and earlier, downloading and installing ProAPOD was pretty straightforward: the customer would login to his or her account page from our website, download the software by clicking on the link available, then finish the install directly from his or her computer. Once installed, and during the first use, the customer was given the option by MS to designate ProAPOD as a “trusted source” (more about this in a minute) and the program would open with all macros correctly working functioning and in turn our software was ready to use. Foremost, our program’s toolbar was clearly visible to the customer without any other further action required on the part of the customer.

Okay, now, before I explain how MS Vista changed things, let me explain what “trusted source” means.

Any application for MS Excel (which ProAPOD real estate software is) that contains macros (procedures written in VBA to make things appear and function, like the toolbar) must be permitted by the user. This is a security issue implemented by MS to prevent the user from inadvertently running macros that might contain viruses. Along this line, to further insure the user that a software’s macros are safe, the developer of the application can purchase a “digital signature” certificate from a recognized online source and attach it to the application, which in turn then is made available for preview and acceptance by the user when the software is opened. As a result, ProAPOD does obtain a code signing certificate annually from Thawte. This not only adds security comfort to the customer, but once ProAPOD is added by the customer as a “trusted source” the first time, the software can subsequently be opened without any further action. ProAPOD will open each time thereafter without the customer having to approve the macros and everything will function without incident.

With MS Vista, however, despite the customer’s approval of our code signing certificate and permission to run macros, another issue has been raised. MS Vista, now by default, classifies all folders and files as “Read Only” and cannot be changed by the user without proper “permission” settings. This will become evident when the customer attempts to save his or her work and is instead alerted that ProAPOD is “read only” and cannot be saved.

Naturally this does make things more complicated for our software customers, but thankfully there is a solution. Please read our article entitled “Resolving Vista Issues” on our website at Resolving Vista Issues.

3 Real Estate Investing Returns Investment Newbies Must Understand

Real estate investing success is not achieved by a “secret” method. Successful real estate investing requires hard work, good research, and a systematic and stringent analysis of each and every investment opportunity.

Yes, a proficient real estate professional can help you find, research, and even analyze the profitability of specific investment opportunities. But that does not mean that you should not be prepared. It is imperative to your investment success for you to have some knowledge of the rates of return real estate investors commonly use during the analysis process before you make that all-important decision to purchase a rental property, regardless.

In this article, we will consider three of the most commonly used and popular returns and measures. By themselves, none of these is a deal maker or breaker. You would not make an investment decision based solely on the results of any of these numbers.  But they are popular, you will hear them referred to, and it certainly will better prepare you to achieve your investment goal by becoming familiar with them.

1) Cash on Cash Return – Cash on cash return measures the return you can expect to receive in the first year of property ownership. In this case, the higher the cash-on-cash return is the greater the profitability of the investment.

Formula: Cash on Cash = Before Tax Cash Flow / Cash Equity (Initial Investment)

Test your understanding: Given the opportunity to invest $50,000 for a cash-on-cash return of 6.5% or an investment of $75,000 for a 10.2% return, which appears to be the better investment? Though it would require more cash outlay, the higher return, at least on the surface, seems to be the better investment. Why, because a first-year yield of 10.2% on your cash investment is better than a first-year yield of 6.5%.

2) Gross Rent Multiplier – Gross rent multiplier (GRM) measures the ratio between annual gross rental income and sale price. It is the least informative measure of an income-property primarily because it does not consider a property’s operating expenses, debt service or cash flow, and by itself is insufficient as a stand-alone number because it says nothing about a property’s profitability.  Nonetheless, gross rent multiplier can be helpful for simple comparisons between rental properties. It is an easy calculation you can make in your head, and can be used when you simply want to get some idea how the price for one rental property compares to similar properties recently sold or currently for sale in the market. In this case, a higher GRM indicates a higher property value.

Formula: Gross Rent Multiplier = Purchase Price / Gross Rent

Test your understanding. If you are considering a duplex with a gross rent multiplier of 7.2 and know that two similar duplexes down the street sold recently at gross rent multipliers of 8.5 and 9.0, what does that suggest? That you could be getting a good deal, and might want to take a serious look at the property. Why, because the gross rent multiplier on the duplex you are considering indicates a higher ratio of gross rent to purchase price then the market seems to suggest.

3) Capitalization Rate – Capitalization rate (also called cap rate) essential indicates the percent of sale price attributable to net operating income (or NOI) and is important because it reveals what percent of the price is available to make the mortgage payment (the mortgage payment is deducted from the NOI). In this case, a higher cap rate indicates that more money would be available to pay the loan, and explains why lenders use it in their appraisals.

Formula: Capitalization Rate = Net Operating Income / Purchase Price or Value

Test your understanding. You know from your research that small office buildings in your area have typically been selling for a cap rate around 8.3%. The building you are looking at results in a cap rate of 6.8%, what does that say about the price? That unless there are some benefits to prove otherwise, the property might be over priced. Why, because the building in question indicates less net operating income as a percent of sale price compared to what the market suggests.

You get the idea. Pure luck is improbable to succeed at real estate investing. So seek out a real estate agent who can help you with the research, and a good real estate investment software solution to run the numbers for you. Because the more prepared you are for real estate investing, the better your chances are to make money at it.

Here’s to your real estate investing success.

3 Mistakes You Must Not Make in Your Real Estate Analysis

Ironically, there are times when you should avoid using the “real” numbers in a rental property analysis to prevent deriving a faulty bottom line. In this article, we will discuss what these numbers are and how you should enter them in your next real estate analysis.

Bear in mind that real estate investing requires accurate income and operating expense numbers to make prudent real estate investment decisions, and often it’s just a matter of showing current figures in the real estate analysis, such as current rents or current property tax. In other words, in this case, the “real” number is what it is, and the analyst would want the bottom line to reflect that number.

Okay, let’s look three instances when you should avoid the mistake of using a “real” number.

1) Vacancy rate – the tendency for many is to show a vacancy rate based on the past performance of the rental property—sometimes even at zero percent. This is not realistic, however, because market conditions, property wear and tear, rent increases, and even a change of ownership can (and often do) cause vacancies. It is always prudent in real estate investment analysis, therefore, to include an allowance for vacancies characteristic to the local market. For example, if the market indicates a 5% vacancy, then use a 5% vacancy in your analysis.

2) Maintenance and repairs – it is a mistake to show the amount actually spent over the past several years for maintenance and repairs. Yes, it’s helpful for a buyer to know what an owner has done to maintain the property, but past expenditures are not necessarily relevant to what a new owner might spend in the future. Whereas the current owner might have a relative to maintain the property at reduced costs, for instance, the real estate investor who is purchasing the property might be required to pay top dollar to a contractor.

3) Replacement reserves – most tend to ignore this altogether because reserves for replacements are not a fixed reoccurring expenditure like property taxes, utilities, or trash. It is, however, wise to include an allowance for reserves in a real estate analysis because it provides for future replacement of worn out items an owner must eventually pay for, and therefore it’s best that an investor plan ahead to spend it.

An experienced real estate appraiser or real estate agent who understands rental property can advise you concerning these numbers. Here’s what you want to know:

(a) Typical vacancy rates in the area for whatever-type property you want to analyze
(b) Typical percentage used to estimate maintenance and repairs (you should get one percentage for brand new or newer units and another percentage for older units)
(c) The dollar amount per unit per year to include for replacement reserves.

Here’s to your real estate investment success.