The study of the properties, collecting information, data in Excel spreadsheet and analyze it carefully.
It is important to pay special attention to clean effective "rent" for sale at market rents. For example, if the collection of comparable rental Citation # 1 and the market of € 500 per month rent for one-bedroom/one-bathroom facility, but offer potential residents a free month after the signing of a lease agreement for 12 months, the real effective rent is $ 458 per month, not $ 500 a month. The formula to determine net cash income is as follows: $ 500 per month, divided by 12 months of the lease is $ 41.67 per month discount for new residents during the duration of the lease. Another possibility for the calculation is too simplistic a free month for 12 months of the lease are as follows (1 month/12 months = 8,33% X $ 500 = $ 458). In principle, the tenant pays 11 months, however, that the costs within 12 months of rent. Now you have an idea, is not it? Excellent!
Fill out the rental network of each floor in the properties investigated. This will take some time to learn, but how do you call the most complete and exercises will be second nature. The most important thing is that you are now a more complex level of analysis, and this will give you a competitive advantage in the marketplace. In addition, a great benefit to you when you use the procedure for subscription, you can more accurately predict cash flows and capital gains. In the past, that he wants to do as an investor is heavier on the basis of ownership of inflated figures.
Research product competition, web design, interior and exterior package prices, offers, or concessions (free rent) and the net cash price and location, to "understand" the situation on the market.
Step 4 - Evaluation of the operating conditions
After market research, addressing the issue of ownership and rental income rolls. It is best if they are several years of historical data. This allows you to properly assess the historical performance and stability of income, which gained power. If you speak directly with the owner of the building, ask for statements of operations for a further 12 months (the so-called T-12) format. One of the main advantages of this format is that it "detailed monthly numbers, so you can analyze the operation of each month in detail.
A T-12 format, you can specify a time anomaly, or income and expenses. For example, if you look at the 30-unit apartment building and a list of brokers, as long as a year before the date (the beginning of the year), the statement by June 2007 (six months of operating data). In many novice investors an annual productivity of the application and use of operating income to determine the purchase price. We analyze this scenario one step further. "What if" other income was $ 20,000 in the game? In that the annual amount that the property valuation, from $ 40,000 per year and other revenue (cable television revenue, the overdue payments are not enough funds, fees, and monthly fee, Carport rental, rental of storage, etc. .).
Well, you said the final statement of income for 12 months, compared to the year format date format. The monthly distribution, the ability to recognize that in April, reported income to $ 15,000, which is only on the "Go" for the resumption of the cable 10. This is a very common practice of providers of cable from the owner of the apartment, premiums in advance for extension of long-term contracts. If the investor for the seller to pay $ 30,000 for this one from the income from 8.0% cap rate implies a value of $ 375,000. In fact, the investor will have a surplus of $ 375,000!
Do not be fooled into believing only in one year from the date of the message on the stock a certain amount of income actually generated this amount each year. Make sure to view the statement in operation 12 months after the format for the analysis of one month after month. This is absolutely essential!
Smart Housing investment of patience, hard work and attitude to a very detailed analysis of competition and the rental income. It became a basic rule to ask important questions, and do not invest any penny unless you can find a full report on each investment taken into account.
Identify and analyze how investment house 2
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