Are you a speculator or investor?
Great fortunes can be made and lost in real estate. William Doom Certified Mortgage Planning Specialists and Sarah Reiter REO Professional are committed, qualified and equipped to help you implement the seven keys to profitable real estate investment:
- Determine Level of Liquidity - liquidity is the ability to quickly convert an investment into cash, without losing any of the principal that you've invested.
- Determine Level of Marketability - marketability is the ability to convert an investment into cash quickly, at any price.
- Determine the Impact of Leverage - leverage is the use of borrowed funds to finance a portion of the purchase price of an investment. The ratio of borrowed funds to the total purchase price is known as the loan-to-value (or LTV) ratio. A high LTV would result in high leverage, while a low LTV would result in low leverage.
- Determine the Impact of Leverage - leverage is the use of borrowed funds to finance a portion of the purchase price of an investment. The ratio of borrowed funds to the total purchase price is known as the loan-to-value (or LTV) ratio. A high LTV would result in high leverage, while a low LTV would result in low leverage.
- Evaluate the Investment Management Issues
1. Asset Management - this is where you monitor the financial performance of the investment and make changes as needed.
2. Property Management - involves the overall day-to-day operation of the property and the physical maintenance of the building or buildings. - Consider the Tax Impact of Your Investment Decisions: This includes such issues as:
1. Classifications of passive
2. Active and portfolio income and losses Capital gains taxes Income taxes
3. Tax Credits Tax deductions
4. Tax Deferments - Evaluate and Reduce Investment Risk - risk is the possibility of losing either the principal invested and/or the potential income from the investment. CMPS professionals help you reduce investment risk in several ways
- Risk Analysis - This is the process of evaluating alternative investments based on their level of risk
- Shifting risk - structure your leases and rent agreements to shift the exposure of increasing costs to the tenants. This can include shifting the risk of rising interest rates, operating expenses or tax increases. - Due diligence prior to purchasing an investment property - Due diligence is the process of examining a property and related documents such as appraisals, inspections, environ mental surveys and title work in order to reduce risk.
For more info or Help with your Real Estate Portfolio feel free to contact William Doom will@MyEquityPro.com
1 comment:
When you invest in real estate you can’t simply invest if the property looks good at face value. A very thorough inspection of the structure needs to be done as well as research on the local market. One must also look into the vacancy rates and average rents for homes or structures that are comparable. A diligent business owner will also look into how the neighborhood is zoned as well as any regulations that will apply to the rental property. You will also want to check into how many other rental properties are in the area and if they are comparable to the property you are looking at.
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