All week we have been discussing the building blocks of real estate investing. Now everyone knows that I believe valuation is the most important, which we discussed yesterday, but we do not want to forget the other very important components of investing. The third and final building block we will be discussing is calculations. When I say calculations, I mean the analysis of the dollar and cents that is required for investors to: judge the results between properties; to set minimum standards; or to compare rates of return between real estate and other types of investment. Using the real estate comps information gained via InvestorCompsOnline you are able to compare properties and decide if they are indeed purchase worthy.
After all, real estate investing is always about the bottom line. Whereas you would want to know how the property’s capitalization rate compares to other similar properties in the area before your purchase, how much (before and after-tax) cash flow you can expect to receive during a specific holding period and how much tax shelter you might benefit from. Of special interest to real estate investors is their return on investment and how it compares between making an investment in real estate to other types of investments such as savings accounts, mutual funds, or stocks that might be more profitable to the investor.
All areas of real estate investing must be considered to be profitable and to be informed in your business. The three building blocks of real estate investing, finance, valuation, and calculation give investors a stable foundation to maneuver wisely through a sometimes volatile housing market. An InvestorCompsOnline account gives you a lead position over other investors with the data and training we provide allowing you to secure the best real estate deals!