Beginning Real Estate Investing - Understanding Leverage

This is one of a series of articles on beginning real estate investing. One of the fundamental concepts to understand as you are beginning real estate investing is the concept of leverage. Leverage is the ability to move or control something very large with a very small object or force. Leverage as it applies to real estate investing is the ability to control high value properties with small amounts of your own cash.

To understand why this is important, and why leverage is so valuable, an example will help. Let’s assume you are just beginning real estate investing and you have $20,000 cash to invest. The exact amount is really unimportant, so long as you understand the principle involved. To illustrate the power of leverage, let’s assume you are faced with three possible choices of how to invest your $20,000.

Choice one is to purchase a small single family home with a purchase price of $20,000. The market rent for this home is $250 per month, or $3,000 per year. For purposes of this illustration, let’s pretend there are no such things as taxes, Realtor fees, or any other costs involved with purchasing a piece of property. Wouldn’t that be nice? As a you are beginning real estate investing you’ll soon learn otherwise, but for now let’s indulge in a little fantasy.

Choice two is to purchase a duplex for $40,000 by putting our $20,000 cash down and borrowing the additional $20,000. The market rent for this duplex is $500 per month, or $6,000 per year. The monthly payment on our loan is $200, so positive cash flow is $300 per month, or $3,600 per year. Not too bad, considering we are just beginning real estate investing.

Finally, choice three in beginning real estate investing is to purchase a multi-unit apartment building for $140,000 by putting $20,000 cash down and borrowing the additional $120,000. The market rent for all the units in the building totals $1,500, and our monthly loan payment is $1100, leaving us a positive cash flow of $400 per month, or $4,800 per year.

Let’s see which of these three situations best demonstrates the power of leverage. To do this we need to make a simple calculation, called Return On Investment (ROI) for each choice. This is a very important calculation to learn as you are beginning real estate investing. ROI is calculated by dividing the amount of return we get back in a year’s time by the amount of cash we have invested.

In choice one, $3,000 return divided by $20,000 gives us a Return On Investment of 15%. Not bad, considering we’re just beginning real estate investing, but let’s see if we can do better. Choice two gives us a return of $3,600 per year for the same $20,000 invested, so our ROI is $3,600 divided by $20,000, or 18%. That’s excellent, but we still have one more choice to look at.

Choice three gave us a return of $4,800 on our investment of $20,000, so our ROI is a whopping 24%! Why so big? Because even though we’re just beginning real estate investing, we were able to “move” or control a much more valuable piece of property with a very small “lever”… in this case, our $20,000. What gave us that leverage? The ability to use Other People’s Money (OPM), but that’s a topic for another article.

Until next time, I’ve written another in-depth article called Beginning Real Estate Investing.

Now, go make more offers!

Beginning Real Estate Investing - Understanding Leverage

This is one of a series of articles on beginning real estate investing. One of the fundamental concepts to understand as you are beginning real estate investing is the concept of leverage. Leverage is the ability to move or control something very large with a very small object or force. Leverage as it applies to real estate investing is the ability to control high value properties with small amounts of your own cash.

To understand why this is important, and why leverage is so valuable, an example will help. Let’s assume you are just beginning real estate investing and you have $20,000 cash to invest. The exact amount is really unimportant, so long as you understand the principle involved. To illustrate the power of leverage, let’s assume you are faced with three possible choices of how to invest your $20,000.

Choice one is to purchase a small single family home with a purchase price of $20,000. The market rent for this home is $250 per month, or $3,000 per year. For purposes of this illustration, let’s pretend there are no such things as taxes, Realtor fees, or any other costs involved with purchasing a piece of property. Wouldn’t that be nice? As a you are beginning real estate investing you’ll soon learn otherwise, but for now let’s indulge in a little fantasy.

Choice two is to purchase a duplex for $40,000 by putting our $20,000 cash down and borrowing the additional $20,000. The market rent for this duplex is $500 per month, or $6,000 per year. The monthly payment on our loan is $200, so positive cash flow is $300 per month, or $3,600 per year. Not too bad, considering we are just beginning real estate investing.

Finally, choice three in beginning real estate investing is to purchase a multi-unit apartment building for $140,000 by putting $20,000 cash down and borrowing the additional $120,000. The market rent for all the units in the building totals $1,500, and our monthly loan payment is $1100, leaving us a positive cash flow of $400 per month, or $4,800 per year.

Let’s see which of these three situations best demonstrates the power of leverage. To do this we need to make a simple calculation, called Return On Investment (ROI) for each choice. This is a very important calculation to learn as you are beginning real estate investing. ROI is calculated by dividing the amount of return we get back in a year’s time by the amount of cash we have invested.

In choice one, $3,000 return divided by $20,000 gives us a Return On Investment of 15%. Not bad, considering we’re just beginning real estate investing, but let’s see if we can do better. Choice two gives us a return of $3,600 per year for the same $20,000 invested, so our ROI is $3,600 divided by $20,000, or 18%. That’s excellent, but we still have one more choice to look at.

Choice three gave us a return of $4,800 on our investment of $20,000, so our ROI is a whopping 24%! Why so big? Because even though we’re just beginning real estate investing, we were able to “move” or control a much more valuable piece of property with a very small “lever”… in this case, our $20,000. What gave us that leverage? The ability to use Other People’s Money (OPM), but that’s a topic for another article.

Until next time, I’ve written another in-depth article called Beginning Real Estate Investing.

Now, go make more offers!

Real Estate Investor Software - Choose Real Estate Investing Software Wisely

The right real estate investor software is helping real estate investors big and small become wealthy. Manually performing tasks such as property and cash flow analysis, contract creation, prospect management etc. is becoming a thing of the past. Technology has led to the development of real estate investing software that performs these tasks in precise detail, resulting in increased productivity and profits. However, not all real estate investor software is equal here are a some tips for choosing the best software.

With more choices of real estate investor software coming on the market, choosing the best software is the hard part. Like other software programs you have several choices some more expensive than others, but one to fit almost every budget. To make the best decision first narrow down your choices based on your budget and investing needs.

If you are considering a certain piece of real estate investor software, a good practice is to do some research online. Reviews are a good way find out how effective the software has been for others. Use a online search engine, like Google, to search for web pages that have feedback on the particular real estate investing software that you are considering. Read both positive and negative feedback on the software to help make a better decision.

Ask colleagues. Who would know better than someone who is using software. Ask around and find out what if any real estate investing software they use, how they like it and if they have any recommendations.

If at all possible, demo the real estate software if the vendor has a trial, so that you can see how it works for your investing needs. You may know someone with the software, perhaps they will allow you to test the software to see how you like it.

It is imperative to know in advance the system requirements for any real estate investor software you may consider. Make sure your computer is compatible with any software and meet the minimum system requirements. Some vendors may offer a refund should the software be incompatible, you might find that the vendor you purchased from does not. Prevent the hassle and make this a top priority before purchasing.

You must ensure that the real estate investing software meets your needs and will benefit you. Primarily what you want to look for is software that allows you to focus on making deals and become more productive and profitable. If the software cannot do tasks faster, better, or cheaper than you can do the work, then it is of no benefit to you. Simplicity and efficiency is the key here. Be aware of all of the functions the software can perform and how they can help you in your business.

Upgrades are an important component of real estate investor software, you will want to know if upgrades are provided by the vendor. Upgrades vary by manufacturer with some offered discounted or free and others requiring full price for software upgrades. Know how often new updates and upgrades are rolled out and all associated fees required to obtain them.

The task of choosing the best real estate investing software for your business does not have to be a chore. Just use due diligence and a little research. Make sure that it is affordable and has functions that provide the benefits needed to allow you to be more productive and profitable. Make your choice the investment in your business that keeps on giving. In other words choose real estate investor software that is going to provide a good ROI.

Real Estate Investing - Simple Tips For Beginners

Investing in real estate can be a profitable business venture, but just like anything else in life, it requires you to know what you’re doing. There are so many unknown variables and countless things that could go wrong. This is the fear that prevents most people from even owning their first property.

Real estate can be a vehicle to financial opportunity, but you have to first define your goals.

But don’t give up hope yet, with the proper preparation and education, you can dive in and earn a living from the real estate industry that have created more self-made millionaires than any other industry.

Before you get started, the first thing you need to consider is what exactly do you want to accomplish. Be sure to keep in mind the various aspects of what being a real estate investor entails.

This will require some research on your part, but it can be an excellent opportunity for you to dig up new and exciting methods for budding real estate investors.

You’ll want to choose an area that you’re very familiar with. This way, you’ll get to know the market value. Once you’re familiar with your chosen area, you’re now the expert and you’ll be able to recognize when a property really is a bargain.

This research can be accomplished with the use of online information, or you can do it in person at city hall. You’ll be checking the city records for a list of recent sales in the county. Don’t overlook the use of your local realtor. They can provide you with detailed information just from a few clicks using the MLS services.

The next things to consider is whether you’re looking for short term profits or if you want to have ongoing monthly income.

If you opt for the short term profits, your choices can be wholesaling or retailing. Wholesaling is where you find properties and then assign them to another real estate investor. This method is a great way for beginners to test the waters, because it requires very little money and none of your own credit.

Another method is called flipping. Just turn on your TV any weekend or weeknight and you’ll be sure to see several programs in which investors purchase run-down property, rehab them and then resell, hopefully, for a profit.

The other option, which includes acquiring a property for ongoing income is another attractive choice for many. If you’re able to produce a monthly passive income, this can be easily become holy grail of real estate investing. To create the desired income, you would just start acquiring properties to meet the monthly income desired.

However, being a landlord may not be all fun and games. You have to know whether you have the temperament for dealing with tenants, and it’s usually when things are not at their best.

So by deciding what type of income you’re after, you can better define your real estate investing goals. Now that you’ve clearly define your expectations, you can set a course to begin your new venture as a real estate investor.

Real Estate Investor Software - Choose Real Estate Investing Software Wisely

The right real estate investor software is helping real estate investors big and small become wealthy. Manually performing tasks such as property and cash flow analysis, contract creation, prospect management etc. is becoming a thing of the past. Technology has led to the development of real estate investing software that performs these tasks in precise detail, resulting in increased productivity and profits. However, not all real estate investor software is equal here are a some tips for choosing the best software.

With more choices of real estate investor software coming on the market, choosing the best software is the hard part. Like other software programs you have several choices some more expensive than others, but one to fit almost every budget. To make the best decision first narrow down your choices based on your budget and investing needs.

If you are considering a certain piece of real estate investor software, a good practice is to do some research online. Reviews are a good way find out how effective the software has been for others. Use a online search engine, like Google, to search for web pages that have feedback on the particular real estate investing software that you are considering. Read both positive and negative feedback on the software to help make a better decision.

Ask colleagues. Who would know better than someone who is using software. Ask around and find out what if any real estate investing software they use, how they like it and if they have any recommendations.

If at all possible, demo the real estate software if the vendor has a trial, so that you can see how it works for your investing needs. You may know someone with the software, perhaps they will allow you to test the software to see how you like it.

It is imperative to know in advance the system requirements for any real estate investor software you may consider. Make sure your computer is compatible with any software and meet the minimum system requirements. Some vendors may offer a refund should the software be incompatible, you might find that the vendor you purchased from does not. Prevent the hassle and make this a top priority before purchasing.

You must ensure that the real estate investing software meets your needs and will benefit you. Primarily what you want to look for is software that allows you to focus on making deals and become more productive and profitable. If the software cannot do tasks faster, better, or cheaper than you can do the work, then it is of no benefit to you. Simplicity and efficiency is the key here. Be aware of all of the functions the software can perform and how they can help you in your business.

Upgrades are an important component of real estate investor software, you will want to know if upgrades are provided by the vendor. Upgrades vary by manufacturer with some offered discounted or free and others requiring full price for software upgrades. Know how often new updates and upgrades are rolled out and all associated fees required to obtain them.

The task of choosing the best real estate investing software for your business does not have to be a chore. Just use due diligence and a little research. Make sure that it is affordable and has functions that provide the benefits needed to allow you to be more productive and profitable. Make your choice the investment in your business that keeps on giving. In other words choose real estate investor software that is going to provide a good ROI.

Beginning Real Estate Investing - Understanding Leverage

This is one of a series of articles on beginning real estate investing. One of the fundamental concepts to understand as you are beginning real estate investing is the concept of leverage. Leverage is the ability to move or control something very large with a very small object or force. Leverage as it applies to real estate investing is the ability to control high value properties with small amounts of your own cash.

To understand why this is important, and why leverage is so valuable, an example will help. Let’s assume you are just beginning real estate investing and you have $20,000 cash to invest. The exact amount is really unimportant, so long as you understand the principle involved. To illustrate the power of leverage, let’s assume you are faced with three possible choices of how to invest your $20,000.

Choice one is to purchase a small single family home with a purchase price of $20,000. The market rent for this home is $250 per month, or $3,000 per year. For purposes of this illustration, let’s pretend there are no such things as taxes, Realtor fees, or any other costs involved with purchasing a piece of property. Wouldn’t that be nice? As a you are beginning real estate investing you’ll soon learn otherwise, but for now let’s indulge in a little fantasy.

Choice two is to purchase a duplex for $40,000 by putting our $20,000 cash down and borrowing the additional $20,000. The market rent for this duplex is $500 per month, or $6,000 per year. The monthly payment on our loan is $200, so positive cash flow is $300 per month, or $3,600 per year. Not too bad, considering we are just beginning real estate investing.

Finally, choice three in beginning real estate investing is to purchase a multi-unit apartment building for $140,000 by putting $20,000 cash down and borrowing the additional $120,000. The market rent for all the units in the building totals $1,500, and our monthly loan payment is $1100, leaving us a positive cash flow of $400 per month, or $4,800 per year.

Let’s see which of these three situations best demonstrates the power of leverage. To do this we need to make a simple calculation, called Return On Investment (ROI) for each choice. This is a very important calculation to learn as you are beginning real estate investing. ROI is calculated by dividing the amount of return we get back in a year’s time by the amount of cash we have invested.

In choice one, $3,000 return divided by $20,000 gives us a Return On Investment of 15%. Not bad, considering we’re just beginning real estate investing, but let’s see if we can do better. Choice two gives us a return of $3,600 per year for the same $20,000 invested, so our ROI is $3,600 divided by $20,000, or 18%. That’s excellent, but we still have one more choice to look at.

Choice three gave us a return of $4,800 on our investment of $20,000, so our ROI is a whopping 24%! Why so big? Because even though we’re just beginning real estate investing, we were able to “move” or control a much more valuable piece of property with a very small “lever”… in this case, our $20,000. What gave us that leverage? The ability to use Other People’s Money (OPM), but that’s a topic for another article.

Until next time, I’ve written another in-depth article called Beginning Real Estate Investing.

Now, go make more offers!

Real Estate Investor Software - Choose Real Estate Investing Software Wisely

The right real estate investor software is helping real estate investors big and small become wealthy. Manually performing tasks such as property and cash flow analysis, contract creation, prospect management etc. is becoming a thing of the past. Technology has led to the development of real estate investing software that performs these tasks in precise detail, resulting in increased productivity and profits. However, not all real estate investor software is equal here are a some tips for choosing the best software.

With more choices of real estate investor software coming on the market, choosing the best software is the hard part. Like other software programs you have several choices some more expensive than others, but one to fit almost every budget. To make the best decision first narrow down your choices based on your budget and investing needs.

If you are considering a certain piece of real estate investor software, a good practice is to do some research online. Reviews are a good way find out how effective the software has been for others. Use a online search engine, like Google, to search for web pages that have feedback on the particular real estate investing software that you are considering. Read both positive and negative feedback on the software to help make a better decision.

Ask colleagues. Who would know better than someone who is using software. Ask around and find out what if any real estate investing software they use, how they like it and if they have any recommendations.

If at all possible, demo the real estate software if the vendor has a trial, so that you can see how it works for your investing needs. You may know someone with the software, perhaps they will allow you to test the software to see how you like it.

It is imperative to know in advance the system requirements for any real estate investor software you may consider. Make sure your computer is compatible with any software and meet the minimum system requirements. Some vendors may offer a refund should the software be incompatible, you might find that the vendor you purchased from does not. Prevent the hassle and make this a top priority before purchasing.

You must ensure that the real estate investing software meets your needs and will benefit you. Primarily what you want to look for is software that allows you to focus on making deals and become more productive and profitable. If the software cannot do tasks faster, better, or cheaper than you can do the work, then it is of no benefit to you. Simplicity and efficiency is the key here. Be aware of all of the functions the software can perform and how they can help you in your business.

Upgrades are an important component of real estate investor software, you will want to know if upgrades are provided by the vendor. Upgrades vary by manufacturer with some offered discounted or free and others requiring full price for software upgrades. Know how often new updates and upgrades are rolled out and all associated fees required to obtain them.

The task of choosing the best real estate investing software for your business does not have to be a chore. Just use due diligence and a little research. Make sure that it is affordable and has functions that provide the benefits needed to allow you to be more productive and profitable. Make your choice the investment in your business that keeps on giving. In other words choose real estate investor software that is going to provide a good ROI.

Real Estate Investor Software - Choose Real Estate Investing Software Wisely

The right real estate investor software is helping real estate investors big and small become wealthy. Manually performing tasks such as property and cash flow analysis, contract creation, prospect management etc. is becoming a thing of the past. Technology has led to the development of real estate investing software that performs these tasks in precise detail, resulting in increased productivity and profits. However, not all real estate investor software is equal here are a some tips for choosing the best software.

With more choices of real estate investor software coming on the market, choosing the best software is the hard part. Like other software programs you have several choices some more expensive than others, but one to fit almost every budget. To make the best decision first narrow down your choices based on your budget and investing needs.

If you are considering a certain piece of real estate investor software, a good practice is to do some research online. Reviews are a good way find out how effective the software has been for others. Use a online search engine, like Google, to search for web pages that have feedback on the particular real estate investing software that you are considering. Read both positive and negative feedback on the software to help make a better decision.

Ask colleagues. Who would know better than someone who is using software. Ask around and find out what if any real estate investing software they use, how they like it and if they have any recommendations.

If at all possible, demo the real estate software if the vendor has a trial, so that you can see how it works for your investing needs. You may know someone with the software, perhaps they will allow you to test the software to see how you like it.

It is imperative to know in advance the system requirements for any real estate investor software you may consider. Make sure your computer is compatible with any software and meet the minimum system requirements. Some vendors may offer a refund should the software be incompatible, you might find that the vendor you purchased from does not. Prevent the hassle and make this a top priority before purchasing.

You must ensure that the real estate investing software meets your needs and will benefit you. Primarily what you want to look for is software that allows you to focus on making deals and become more productive and profitable. If the software cannot do tasks faster, better, or cheaper than you can do the work, then it is of no benefit to you. Simplicity and efficiency is the key here. Be aware of all of the functions the software can perform and how they can help you in your business.

Upgrades are an important component of real estate investor software, you will want to know if upgrades are provided by the vendor. Upgrades vary by manufacturer with some offered discounted or free and others requiring full price for software upgrades. Know how often new updates and upgrades are rolled out and all associated fees required to obtain them.

The task of choosing the best real estate investing software for your business does not have to be a chore. Just use due diligence and a little research. Make sure that it is affordable and has functions that provide the benefits needed to allow you to be more productive and profitable. Make your choice the investment in your business that keeps on giving. In other words choose real estate investor software that is going to provide a good ROI.

Real Estate Investor Software - Choose Real Estate Investing Software Wisely

The right real estate investor software is helping real estate investors big and small become wealthy. Manually performing tasks such as property and cash flow analysis, contract creation, prospect management etc. is becoming a thing of the past. Technology has led to the development of real estate investing software that performs these tasks in precise detail, resulting in increased productivity and profits. However, not all real estate investor software is equal here are a some tips for choosing the best software.

With more choices of real estate investor software coming on the market, choosing the best software is the hard part. Like other software programs you have several choices some more expensive than others, but one to fit almost every budget. To make the best decision first narrow down your choices based on your budget and investing needs.

If you are considering a certain piece of real estate investor software, a good practice is to do some research online. Reviews are a good way find out how effective the software has been for others. Use a online search engine, like Google, to search for web pages that have feedback on the particular real estate investing software that you are considering. Read both positive and negative feedback on the software to help make a better decision.

Ask colleagues. Who would know better than someone who is using software. Ask around and find out what if any real estate investing software they use, how they like it and if they have any recommendations.

If at all possible, demo the real estate software if the vendor has a trial, so that you can see how it works for your investing needs. You may know someone with the software, perhaps they will allow you to test the software to see how you like it.

It is imperative to know in advance the system requirements for any real estate investor software you may consider. Make sure your computer is compatible with any software and meet the minimum system requirements. Some vendors may offer a refund should the software be incompatible, you might find that the vendor you purchased from does not. Prevent the hassle and make this a top priority before purchasing.

You must ensure that the real estate investing software meets your needs and will benefit you. Primarily what you want to look for is software that allows you to focus on making deals and become more productive and profitable. If the software cannot do tasks faster, better, or cheaper than you can do the work, then it is of no benefit to you. Simplicity and efficiency is the key here. Be aware of all of the functions the software can perform and how they can help you in your business.

Upgrades are an important component of real estate investor software, you will want to know if upgrades are provided by the vendor. Upgrades vary by manufacturer with some offered discounted or free and others requiring full price for software upgrades. Know how often new updates and upgrades are rolled out and all associated fees required to obtain them.

The task of choosing the best real estate investing software for your business does not have to be a chore. Just use due diligence and a little research. Make sure that it is affordable and has functions that provide the benefits needed to allow you to be more productive and profitable. Make your choice the investment in your business that keeps on giving. In other words choose real estate investor software that is going to provide a good ROI.