Three Questions to Ask Before Investing in Real Estate

By
Mortgage and Lending with EstaR Mortgage NMLS #241125
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  1. How can I increase my rate of return?  The cornerstone of any smart investment strategy is to calculate your rate of return.  With real estate this is done by running the numbers using an internal rate of return (IRR) formula that takes into account:
    • Present Value (PV) - what am I paying out of pocket to get into this investment?
    • Term (N) - what's my timeline and how long am I going to hold this investment?
    • Periodic Cash Flow (PMT) - what's my monthly cash flow?
    • Future Value (FV) - what are my net proceeds (after expenses) when I sell the investment?
  2. How does my rate of return with real estate compare with other investment opportunities?  When calculating your rate of return, make sure to account for:
    • Carrying costs (mortgage, taxes, insurance, maintenance, etc.)
    • Your time spent managing the property
    • Vacancy loss if you don't find a tenant
  3. How can I reduce my risk?  You may want to consider these strategies to reduce your investment risk:
    • Increase your liability insurance in case something goes wrong
    • Consider a rent-to-own strategy where you find a tenant before you find a property
    • Consider mortgage strategies that result in more cash flow and/or better liquidity 

 

 

Contact me so we can get started on helping you answer these questions! 

Chris Freck MBA CMPS
Chris Freck MBA CMPS
Broker
NMLS: 241125
EstaR Mortgage
mylender@EstaRM.com
(510) 463-1003
2413 Webb Avenue, Suite E,
Alameda, California 94501
Corporate NMLS: 1547521
Mutzig Managment, Inc dba EstaR Mortgage Licensed by the California Bureau of Real Estate, BRE License #2020370, State of Oregon Division of Financial Regulation Mortgage Lending License ML-5741 & Washington State Dept of Financial Institutions MB-1547521, NMLS#1547521. This material is not from HUD or FHA and has not been approved by HUD or a government agency.        
 

Comments (2)

Norma J. Elkins
Elite Realty Group - Morristown, TN
Realtor - Elkins Home Selling Team

Very great information about investing.  Number 2 is very important.  Sometimes people don't realize just how much you can make.  Thanks for sharing!

Jul 22, 2019 08:12 AM
Chris Freck
EstaR Mortgage - Alameda, CA
EstaR Mortgage, A Bilingual Brokerage

For more information, we can be reached at 510-463-1003

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MyLender@MyEstaRM.com  
https://EstaRmortgage.com

Thank you!

Jul 24, 2019 11:22 AM

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