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The Experts in Real Estate Analysis

Proper amount of homework can differentiate between failing and succeeding in any market, especially in one like real estate where new players enter the market every day, shifting the competitive landscape and threatening those who are oblivious to the new developments occurring in the field.
This is why real estate analysis is one of the most important parts of managing any investor’s property. It helps you keep up with the market’s ever-changing conditions and lets you prepare well in advance for your future investment needs. It can help you adjust your strategies just in time with that of your competitors’ so you don’t lose your profit to them.
Real estate Analysis is also important to keep the investor fresh on research and knowledge to keep moving forward at all times. Because once an investor’s profits start to stand stagnant at a level, he might get stuck, and before too long, the profit margins might start to fall drastically.

All these circumstances should be in an investor’s mind plenty of time before they rise to the surface. A proactive approach is the only approach that has been proven to work in this regard. At the Republic Investment Group, the first step we take before making any investment on behalf of our clients is to conduct a proper in-depth analysis of their investment options and interests.
Our years of experience working with multiple clients in every sort of complex market have always given us an upper hand over the problems any of our partners come to face while making or managing their investment. Having worked in different market conditions, we are prepared to advise our partners against any ups and downs that the time or the economy might bring upon them and their investments.

Before you even choose the kind of property you want to invest in, we will present you with all the reasons you should invest and all the reasons that you should not. We will explain to you using our expertise what kind of investment would be ideal for the kind of investor you are and what kind of return you are looking for to come out of your investment.

Every experienced real estate investor understands that the time when one purchases the property is the actual time to make money, the physical profit would come along in the future when it is time to sell the property but making the right decisions and doing the accurate analysis at the time of purchase will determine how much of a profit you will be making when it is time to sell. That is because an ordinary realtor or estate agent might have you believe that if you market the property properly at the time of sale, you can rake in any amount of profit, you have to use the right tools needed to make the property attractive to the buyers. But it is actually virtually impossible to gain a substantial profit on a property that you purchase for an unreasonably high price. An overpriced property will bring in little to no profit, no matter how much effort you put into making a sale. It is rather easier to add value to the property after purchasing for a reasonable and fair price and then selling it for a big profit margin. The property does not need to be in perfect condition when you purchase it, all that matters is that it is priced right. Instead of paying extra for the property at the time of purchase, you should instead buy a property for a lower price and invest that extra money you saved on the property’s price to renovate or remodel it according to what the market demands in that particular time.

With our specialized training to work with investors of all kinds and properties of different sizes and scales, the Republic Investment Group will give you a complete picture of every factor involved in making and managing your investment. We regularly review real estate market performance reports from the most authentic sources and keep an abundant amount of information on each real estate market throughout your state.

So, contact us today, and we will ensure that you gain the most profitable return on the investment you wish to make!

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How to Determine the Value of Your Real Estate Investment

Real Estate Investment

Please answer a simple question: How much time do you spend picking out clothes every morning? Usually, it’s longer than most investors spend doing the math for real estate investment analysis. Unfortunately, people select deals based not on analytics, but intuition.

Diving deep into the details of deal analytics may feel like a trip to jargon-town. Total return? Cash-on-cash return? NOI? Cap rate? Feeling bewildered? You’re not the only one.

In this article, we teach you how to determine the value of your real estate investment – the preliminary step towards conducting a real estate analysis. Different properties are valued differently. Evaluating a triplex the same way you assess a single-family home will lead to a wildly skewed figure. Here is what you need to know.

Single-Family Homes

Market comparables (comps) identify the value of the investment, single-family homes, etc. These comps are nearby properties demonstrating similar characteristics. They share variables like amenities, garage size, number of bathrooms and bedrooms, floor plan. Generally, a single-family investment home increases in value if a similar home nearby is also increasing in value – and vice versa.

Multi-Unit Properties

Larger investment properties – those consisting of at least two units, and especially those with over four, are valued and priced differently. The value is directly related to how much profit or income the property generates. It’s possible that an apartment building in a neighborhood where house prices are declining could increase in value.

You can’t compare your apartment building to others down the street to assess how much it’s worth. This is where real estate investment analysis comes in handy. There are several primary factors to take into consideration. However, appreciation and cash flow are the two most important variables. To put it simply, cash flow is the money left after every bill has been paid, and appreciation is referred to as the equity acquired as the value of property increases.

Since there aren’t many ways to estimate future appreciation without a crystal ball, it’s better to focus on the cash flow.

Collecting your information

Good financial analysis consists of feeding a bunch of information into a financial model and using its calculations to determine whether the investment is good or bad – and right for you. Be aware of these variables for the most comprehensive financial analysis of a residential property:

  • Property details – utility metering design, square footage, number of units, etc.
  • Purchase information – improvement costs or purchase price plus rehab, or total purchase expenses.
  • Financing details – loan or mortgage information, like closing costs, interest rate, down payment, and the total loan amount.
  • Income – rent payments along with any other income the property generates.
  • Expenses – maintenance costs, including maintenance, insurance, and property taxes.

Actual or Pro-Forma Data

Getting good data from your model needs accurate, reliable information. Remember: It is in the seller’s best interest to offer appealing, not precise, numbers. For instance, they may offer high rental income approximations or neglect to mention some maintenance expenses. It is part of the investor’s job to ensure you have the best available information.

Estimated – or pro-forma – data from the seller only kicks off the discussion. Determine the actual numbers before closing. Ask to see maintenance records, property tax bills, and previous years’ tax returns. Hopefully, the actual data resembles the pro-forma data. However, don’t be surprised if it doesn’t.

Don’t forget to check for a prospective surprise

Check for a surprise as well. For instance, when was the last time the property was evaluated for taxes? If it was a while ago, and values have substantially increased, it is possible that the taxes will increase and the property will soon be reevaluated. Even little changes to expense and income numbers can mean significant changes to your bottom line.

Where to look for data?

Confused as to where to track down the necessary information? Begin here.

  • The seller must make the property details available. For more detailed, comprehensive information, check with your local records.
  • Purchase information comprises any improvement or upfront maintenance work that must be finished before the property’s income potential is met. Have the property inspected to ensure that no hidden problems or issues exist.
  • Your mortgage broker or lender may offer financing details.
  • The seller directly gives the income details – but don’t depend on pro-forma data. You can also have a chat with the property management firm currently dealing with the property, if one exists, for this information.
  • The property Management Company or seller must directly offer expenses. A building inspector can notify you regarding any major repairs that may surface, like an HVAC system or a new roof. 
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Real Estate Investment Analysis – The Right Way of Doing It

Real Estate Investment Analysis

Analysis is an integral part of real estate investment, investors who want to reap the lucrative benefits of real estate investments should do a complete market analysis before entering the domain of real estate. Rental home investors usually have several units or properties on their hands, but not every property is the same when it comes to cash returns. Some properties might pay off more than the others. Investing in the right real estate property could result in double-digital cash backs, along with consistent cash flows for many years to come.

You might be wondering what do you have to do to get similar cash returns on your real estate investment? Well, we’re about to share the secrets of analyzing real estate investments so you too could reap the full benefits of your rental property.

Analyzing Cash Flow

Evaluating your cash flow is the most important thing before you invest in a real estate property. The more you borrow, the less your cash flow will be. When you subtract the debt service from your Net Operating Income (NOI), then you have your profit. If you pay cash for your property, only then your NOI will equal your cash flow.

The real estate market is always in flux, and your cash flow is directly affected by the on-going changes in the market, along with several economic factors. For example, the demand for a rental property could hike overnight because of a new shipping port or a factory opening in the area; the demand could also plummet when the local business closes and moves elsewhere.

Economic factors

The federal reserve also has a part to play in regulating the price of the property as they could increase the interest rates, which will drive up the basic cost of borrowing while having a ripple effect on the real estate market. This small change could increase the cost of buying new real estate properties, which could result in reducing your cash flows.  

Due diligence is the only solution

Such things are beyond the control of the common man, but no one is stopping you from preparing for these situations. Due diligence about the condition of the local business and keeping an eye on economic news while predicting changes in the interest rates could almost make you immune from all such changes. Keep your contracts and leases according to the market conditions, and your properties will be as profitable as they could have been.

Analyzing NOI

Assessing your NOI is the basis of any real estate investment analysis. To simply explain, NOI is one of the several real estate metrics used by investors to evaluate how lucrative the real estate property could be. NOI is the primary indicator of the property’s on-going revenue, but it does not include capital expenses like loan coats and taxes. If you want to know the NOI of your property, then subtract the expenses from the total income, and you’ll have your NOI.

There are other factors to consider as well like, property taxes, depreciation, insurance, and maintenance while investing in a real estate property, but one thing is sure, if you want to make double digits cash backs on your real estate properties, then you need to analyze every angle and corner of the property before you decide to invest in it.