Financial Analysis Of Real Estate Investments

Posted on July 3, 2008
Filed Under Real Estate |

To amplify your profits when investing in property, it is essential to dissect the numbers pertaining to your prospective property acquisitions just as you might do with stocks.

Once you have established the location that you are going to invest in (the factors you should take into consideration when selecting a target area are taught by real estate educators such as Hans Jakobi’s Real Estate Secrets, but fall beyond the scope of this article), you should bring a comprehensive Inspection Checklist which you can tick off whilst inspecting each property.

You could create your own such checklist, search for one on the internet, or instead use a real estate analysis program intended for this purpose.

One such award winning software is the POSH Property Owner System. POSH is actually 2 programs in one, as it comprises a Real Estate Analysis Part, in addition to a comprehensive Management Part.

The entire workflow of the program is in actual fact conceived to mimic the real estate investment process from assessment, thru to acquisition, financing, leasing, and lastly selling.

The Analysis Module enables you to examine and evaluate many prospective acquisitions against one another with a comprehensive Inspection Checklist which you can print out and take with you when viewing potential purchases.

Later on, upon returning to your house or office, you can submit your entries into the POSH software program in order to evaluate gross versus net yields, $ per square meter, price-earnings ratios, internal rate of return, forecast capital appreciation, and before and after tax cash flow. The reports it then generates will allow you to evaluate and evaluate multiple prospective purchases against one another.

Beyond the analysis aspects of the program, it also enables you to manage your property portfolio by permiting you to enter and keep track of all revenue and expenses pertaining to each of your properties. This includes such things as mortgage interest and related mortgage and refinance costs, tenancy and lease data, property management expenses, council and water rates and insurance, and maintenance expenses.

Once entered, POSH Property Software Program permits you to create thorough revenue and outgoings reports, depreciation schedules, rent receipts, and can compute your capital gains tax you would need to pay upon sale of the property. Another module allows you to create a detailed budget and compare it, as time progresses, with your actual revenue and expenses.

In addition to the benefits sumarised above, using software like the POSH Property Owner System will also ease your workload at tax time. With all of your revenue and outgoings data pre-entered as it was incurred during the course of the previous year, you only need to press a few buttons to output a few reports to take to your accountant, and these will enclose all the information he or she is likely to require to prepare your annual return.

You may not be preparing to be the next Rick Otton of Massive Passive Cash fame in property investment, with dozens of properties under your belt, but you need not be in order for POSH to be of noteworthy assistance and benefit to you. Investing in real estate is a capital intensive activity, so the cost of a software program like the POSH Property Owner System is trivial when contrasted with the monetary benefit you could glean from the education and breakdown provided in the Analysis Module of this software in assisting you to decide on a property that is liable to do better than the others in a given location.

Tags: Real Estate

Financial Analysis Of Real Estate Investments

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