Investor Buyer

I have been an investor and I have strong opinions about investor’s. For example, I believe that all buyers of real estate, whether as their personal residence, a vacation home, a repair & flip or as a rental unit are investors. We all want our investment in real estate to appreciate in value.

I have taken extensive investor education classes also and one cool tool that I received from Own America is the case study app. It allows you to enter your home purchase information and it will return some great analysis info regarding that purchase. One of the best reference points to use to gauge the good vs. bad characteristics of a particular investment is the cap rate (Capitalization Rate). This case study tool shows the cap rate as well as many other cool things. Try it here by clicking on the Own America image below.

(Look below the link to see the instructions, if needed, on how to fill out the case study tool)




Click on the link below

Try to save this page to your desktop or bookmark it so you can go back to it later.

Play around with some of the numbers and watch the changes happen. Hover your mouse over the graphs to the right and see what the numbers are. If you have questions about any of the numbers, ask me. Let me know what you think.

If paying cash for the property, enter the purchase price as the down payment also. Closing costs should be nominal if paying cash. Leave mortgage amount and interest rate blank or zero when paying cash.

For appreciation, I use 3.4% ( 40 year national average) or use a higher or lower number if you like. Enter annual rental income, vacancy rate (I normally use 3% – 5%). It will calculate effective gross income. When you click on expenses, a side window appears to enter some details. Don’t get vcarried away. Just enter the costs that you know about like property taxes, insurance (I use $800 to $1000 for a modest property and $1400 to $1800 for a grander home) and under other enter the property management fee, if you have one. There should not be any legal, commissions or very much in utilities. The maintenance could be pest control, lawn care (if you pay for that), etc.

The only other thing you might want to enter would be an annual rent increase & expense increase. I usually keep that at 2%. Enter zero for mortgage term, unless you’re getting a mortgage. Watch the graphs change as you enter data. Then when done entering, hover your mouse at certain points in time on the graphs on the right to see the results. Very cool.