ProAPOD has just completed the following instructional real estate investing video to help you understand depreciation allowance and how to compute the mid-month convention required by the tax code. It is just 4 minutes long but packed with enough information to give you a solid idea how the mid-month convention works. If you are engaged in real estate investing then this free video will be worth watching. You might also want to check out our Learning Center for more free instructional videos and articles.
One of the most popular ways agents and investors do a rental property analysis is with real estate investing software. And, of course, it is prudent to buy any software at the most affordable price (we all do that), but should you ever expect to find free real estate investing software anywhere on the web or elsewhere?
As one who has developed investment software, and therefore can boost of having first-hand experience in what it takes to produce a quality program, I would have to respond with an adamant, No way. Remember the adage, “There ain’t such thing as a free lunch”?
Okay, let me explain why the notion of trying to find free quality software is both, improbable and naive.
The Hours Invested
Any software worth its weight in salt requires untold hours to develop. Whether the software is coded as an application for Microsoft Excel or as a stand-alone program, some developer spent untold hours writing the code, or otherwise paid an arm and a leg to someone else to write the code.
In my case, I wrote the code for my real estate investment software with blood, sweat, and tears over long arduous hours. In fact, there was a point early on (a few weeks following the release of ProAPOD in 2000) that my earnings worked out to be something like fifty cents per hour. Thankfully it’s changed (I wouldn’t be here to offer my software eleven years later otherwise), but you get the idea. Real estate investing software doesn’t (as they say) grow on trees, and there has only been one Mother Teresa; so you should expect to pay something for the time a developer has invested creating his software.
The Cost of Marketing
I am the first to applaud the marketing opportunities that have opened up due to the World Wide Web. It affords entrepreneurs at every level a chance to broadcast services and products to an audience in numbers never imagined even as early as ten years ago. But it does cost.
To begin with, there is the cost of establishing a website. This requires the registration of a domain name, a fee to the hosting server, and, of course, the actual design work.
Next, there is the cost of advertising. The most common method on the web is known as PPC (i.e., pay-per-click). For those of you unaware, the companies you see displayed while browsing have to pay each time their ad is clicked; whether you buy the product or not.
Next, there is the fee to the company who processes the order. I use PayPal, and they are terrific, but they do take a bite out of every transaction.
The Cost of Support
I am committed to giving those using my real estate investing software quality support, and never begrudge having to field questions from my customers. But it does require time; and unlike an attorney who might start the meter the minute the conversation begins, most software developers like me (at least those of us smaller than Microsoft) do not charge customers for support calls.
The point here is not to bemoan the costs associated with running a business, but to help you understand that there is no such thing as free real estate investing software because no software with any measure of quality can be offered to you without cost. In my case, I have purposed to make ProAPOD as one customer put it, “The most affordable software of its kind on the market today.” But alas, despite my personal commitment to provide the real estate community with the best product at low-cost, it still is not free.
Ask any real estate analysis software developer about the best program available and, naturally, you will get a resounding, “Mine is”. Fair enough. After all, a lot of blood, sweat and tears go into the development of a real estate investing program. So not unlike the patience we afford to a proud father publicizing that his child is remarkably special, we should be willing to give all software developers a pass; at least once.
Okay, that’s enough love to get the birds chirping, so let’s get on target: How do you find the best real estate analysis software to meet your particular objectives?
Namely, it depends on what you hope to accomplish. That is, are you willing to stick with the basic essentials for your rental property analysis and eliminate the more robust elements for time value and tax shelter; or are you prepared to take the plunge and go for an in-depth analysis with all the trimmings?
Here’s what I mean.
The return that real estate investors covet most is cash flow. This is the essence of real estate investing: that what investors really are purchasing when they make an investment is the cash that the property produces. If not on a monthly basis, or maybe not even on an annual basis, then at the very least, at the end of the day when the property is sold, they will fully expect to collect some amount of money that exceeds the amount they invested; and this is cash flow.
But cash flows are not created equal (at least not to an investor). Because there is income, and then there is income after Uncle Sam takes a bite out of it. In the world of real estate investing this unavoidable event results in what is known as cash “before” and cash “after” taxes; or CFBT and CFAT respectively.
A good real estate analysis software solution that provides only the basic elements will enable you just to determine the former CFBT whereas one that provides for the elements of tax shelter will allow you to also consider the latter CFAT.
So you must decide how far you want your rental property analysis to go. It’s probably safe to start with the basics, but if you’re serious about investment property, you should also plan to upgrade to the more robust features in the future.
The same is true for time value of money. In this case, when the real estate analysis software does make the computations for time value you can also measure cash flows in light of “when” they are received as well as the “amount” received.
This is important to investors because there is a value of money associated with time, otherwise characterized as the “purchasing power” of money. This requires little explanation because as a consumer you know that $20 five years ago purchased you more gasoline than it does today (i.e., the purchasing power of the exact same amount of money was affected over time).
Now take that idea and apply it to the thousands (perhaps hundreds of thousands) of dollars an investor is going to shell out to purchase an apartment building and hold maybe for five years. There really can be no true measurement of profitability by owning that particular rental property without considering the time it will take for the investor to collect his earnings.
In this case, prudent investors look at such returns as internal rate of return, net present value, and financial management rate of return when making an investment decision; and a good rental property analysis program with the elements for time value typically computes these returns.
This one-two punch of tax shelter and time value will cost slightly more than the basic elements, but the best real estate analysis software you can buy will best satisfy your objectives. I tend to believe that real estate agents who primarily sell residential properties and are merely looking to get started with investment real estate can do quite well without these more robust elements (at least initially). Whereas those more engaged who are looking to build an ongoing real estate investing business should have these features.
The bottom line, then, is that “best” is not what the developers say about their program, the best real estate analysis software you can purchase by and large depends on what is best for you.
Here’s to your real estate investing success.
Last week when we released our unique online real estate calculator (it teaches as it calculates), we made it clear that we are open to suggestions from users for additional calculations they would like to see added to the program. Well, we stayed true to our word. Earlier this week a user did in fact suggest two computations that we did add to the Amortization category. Namely, computations for an “interest-only mortgage”, and another for a “short term mortgage”. Here’s what they enable you to do.
The interest-only mortgage calculation will enable you to determine the monthly mortgage payment without any reduction for principal. In this case, only the interest is paid monthly and the loan is not reduced.
The short term mortgage calculation will enable you to determine the amount of future interest that would be paid on a mortgage that is a combination of interest-only and standard amortization but on a loan that is all due and payable in a shorter term. For example, this would apply when a borrower negotiates a five-year loan that is paid with interest-only monthly payments for the first year, and then monthly payments fully amortized over thirty years for the remaining four years.
These updates are totally free to our real estate calculator customers. In fact, because the program is 100% web-based, customers will immediately have access to these (and other calculators we add over time) the next time they log in.
If you are not yet familiar with this online real estate calculator that also teaches the definitions and formulas for dozens of time value, tax shelter, cash flow, and real estate investment returns, we encourage you to visit the proapod website and discover it under real estate calculator. We do offer a 50% discount to teachers, students, and real estate professionals. If you qualify, you pay just $24.95.
We just released a video that gives a quick overview of our newly-developed online real estate calculator. It is short (just over 2 minutes) and illustrates by example how the definition, results, and formula is displayed when a computation is made. You can watch the video by clicking here => Watch the real estate calculator video presentation
Allow me to highlight a few of the features of this program for those who might not have heard about it.
1) This unique online calculator was specially-designed so users can make complex computations, plus learn the definitions, plus learn the formulas for a range of time value of money, cash flows, tax shelter, rate of return, and other calculations associated with investment real estate.
2) This calculator is 100% web-based with nothing to download, no third-party software requirements, and no computer restrictions. Use it on a PC, MAC, IPAD, Smart Phone, or on any other internet device that accesses the web at any time, from any device, from anywhere.
3) Computations are effortless. You simply complete a user-friendly form and the result appears instantly. Here are just a few of the dozens of calculations that you can make quickly and easily: Present and future value, Internal Rate of Return (IRR), Net Present Value (NPV), Financial Management Rate of Return (FMMR), Cash Flow After Tax (CFAT), Return on Equity (ROE), Cap Rate, Cash on Cash Return (COC), Sales Proceeds Before Taxes, and Profit and Rate of Return (for those who buy and flip fixers).
4) There are no subscription fees (just one low first-time payment), and it does come with a full money-back guarantee (so you can try it risk-free).
5) Teachers, students, and real estate professionals are offered a special-reduced price.
Be sure to watch the video and visit the web site to learn about this unique online real estate calculator. It is truly a calculator that you can learn (or teach) by.
ProAPOD recently released it’s unique and exciting online real estate calculator. This is a 100% web based program that makes dozens of time value, cash flow, tax shelter, and investment real estate returns effortlessly and at the same time teaches the definitions and formulas in real-time as the calculations are made.
This program provides users an excellent and easy way to make calculations for complex computations that otherwise would require a series of numerous and cumbersome steps on a hand-held financial calculator. Including, the Financial Management Rate of Return (FMRR) and Accumulation of Wealth (AoW) used by the Certified Commercial Investment Member (CCIM) Institute, Internal Rate of Return (IRR), Net Present Value (NPV), and more. With the ProAPOD real estate calculator entries are made in a user-friendly form and the results appear instantly. So users really do get to make dozens of calculations at their fingertips in virtual seconds.
This program also provides definitions for the computations. For instance, users can learn the meaning of present and future value, discount and compound rate, depreciation, mid-month convention, taxable income, adjustable basis, and all the other calculations that this program includes. So users always have the meanings readily in front of them when they are making a calculation.
This program also provides dozens of formulas for a wide-range of calculations such as depreciation allowance, cap rate, cash on cash return (COC), cash flow after tax (CFAT), taxes due on sale, and others. The formulas appear instantly with the solution and results for the calculation. So the user can learn how these essential real estate investing returns are computed.
This online calculator is a 100% web based program. So there is nothing to download, no requirement for third-party software, and it can be used 24/7 on any device that connects to the web such as a PC, MAC, IPAD, or Smart Phone. The user simply has to go to the ProAPOD website and login.
This is truly a remarkable real estate learning and teaching tool as well as a powerful calculator.