Realnet Tampa Bay

In this economy, the stock market isn’t doing very well. A lot of people are pulling their money out of the stock market because of the failing economy. A great reinvestment plan is to put that money into real estate investment, which is a booming industry!

First time investors often get over excited and buy up a collection of cheap houses for sale without understanding what they’re getting themselves into. Choosing your first investment property should only be done with a lot of knowledge under your belt.

This is where an experienced investment broker like Realnet comes in. Our experts have the knowledge to help you get the ball rolling on starting your real estate investment portfolio. We also have a multitude of research

We can help you focus on establishing what your goals for you investing are, set up a plan to reach those goals, and help guide you to the properties that will best fit your needs. Our agents can answer all of your questions, and will show you the best properties.

Once you’ve bought your first property, it’s time to take care of any necessary repairs, renovations and maintenance. We have many builders and contractors that we work with that can get the work done quickly and efficiently; after all, we want to help you turn a profit as soon as possible!

If your plan involves using the property for rental income, Realnet can help with that as well. Being a landlord involves a lot of small tasks that can often become large headaches, especially once you own a lot of properties. RealNet’s property management group can help find and screen tenants, handle repairs and deal with all of the small responsibilities involved in being a landlord.

Real estate investment is a great choice for new investors as well as for those who want a more stable alternative to the stock market. Realnet of Tampa Bay can get you on the right track to success!

In the real estate world, your credit score is a vital part of the process. Your credit score is a number that represents you to the lender. Because it’s so valuable, you should monitor your credit on a regular basis as well as protect your score from any outside forces that can lower it.

Credit scores can range anywhere from 300 to 800. “Good credit” is generally classified as anything above 630. To prevent future problems, you should do everything you can to keep your credit score above 630.

The question many people have is how do you monitor your credit? How do you know if someone has stolen your identity? The first thing you should do is get a copy of your credit report once a year. There are 3 credit reporting agencies: Experian, TransUnion and Equifax. Getting a copy from each agency is a must, because different companies report to different agencies.

To protect yourself against identity theft, pay for a credit monitoring service. A service such as this will make sure your credit is safe from financial fraud, social security fraud, medical ID theft, tax fraud, criminal activity, child ID theft, employment fraud and benefit fraud.

Failure to protect your credit can affect your life in too many ways to count. It can affect your employment, make it harder for you to purchase anything on credit, and you can end up being bombarded with phone calls from creditors that don’t care whether YOU actually made the purchase or not.

Ask Realnet’s agents how your credit can affect your buying power. Contact us today to find out how your credit may affect your ability to purchase Florida investment properties.

Whether you’re already a property owner, or are new to real estate investment, it’s important to consider what you plan to do with the properties you invest in. There are, essentially, two common approaches to property investment: to choose one of the many cheap sales for sale, buy it, fix it up, and resell it; or purchase a property and rent it out.

Right now, the selling market is in a bit of a slump, so renting your properties out is a better choice. Before you decide to become a landlord, however, it’s a good idea to know what you’d be getting yourself into. What’s required of a landlord? What are the laws in your state?

Aside from regular and routine maintenance, Florida landlords must abide by the following conditions:

• The roof must be in good condition, with no leaks;
• The walls cannot leak air, and must be in decent repair;
• If the property contains stairs, they must be safe and in good repair;
• Windows and doors have to be air-tight, and outside doors must have working locks;
• Window panes cannot have any cracks or holes, and must have screens;
• Floors, ceilings and walls must be rodent-proof and be in good condition;
• The property must have hot water connected to the sinks, tubs and shower;
• A working toilet is a must;
• If you provide appliances, they must be clean and in good working order;
• Either garbage disposal or disposal containers must be provided;
• Each room must have a minimum of at least 2 working electrical outlets;
• Kitchens, bedrooms, bathrooms and hallways must have either a wall fixture or a ceiling fixture, or an outlet controlled by a switch near the entrance;
• And, there cannot be any electrical problems.

Some of that may sound like common sense, but it is always good to know the law. Many of these responsibilities can be taken care of by hiring a property management firm, but it’s necessary to make sure that the firm you hire is taking care of everything for you. Failure to follow the guidelines can result in the withholding of rent, and even lawsuits.

That may seem like a stupid question; after all, the definition of cheap house is one that costs less than what it’s worth, right? Yes, but that’s not the whole picture. The cost of a house depends on more than just its selling price.

To illustrate the point, consider a house that’s for sale for $40,000, but has a market value of $100,000. That sounds like a great deal, doesn’t it? So an investor buys the house…then they find out that the house needs work that’s going to cost $40,000, no one wants to rent the house because there’s a junkyard in the backyard, and that same junkyard is bringing down the property values of all the houses in the neighborhood.

This is why evaluating an investment before purchasing is so important.

The other factor that should be considered is your personal goals. What seems like a great deal to one investor may not be for another, because it gets them one step closer to their goals. It helps to have a business plan for property investment, because this helps outline your goals and how you plan to reach those goals.

If your goal is to generate a healthy residual monthly income as quickly as possible, then your idea of a cheap house would probably be one that you buy below market value, needs little to no repairs, and is in an attractive area with amenities nearby. Other investors may want to buy the house as cheaply as possible, do the repairs as cheaply as possible, then rent it out. Often this can be the cheapest route (moneywise) but a lot of investors don’t want to wait for the repairs, or deal with the aggravations of getting the repairs done.

On the other hand, if you’re looking for houses that will appreciate quickly, a cheap house will simply be one in a growing and/or improving neighborhood. Be sure to price all repairs prior to purchasing; even if the selling price is within a reasonable amount, the appreciation rate won’t matter if the costs of the necessary repairs are too high.

To determine exactly what type of cheap house will help you meet your needs, contact us. One of our experienced brokers can show you our current selection of cheap houses for sale and help you determine which ones align with your goals.

It’s almost the end of another year! Have you gotten all of your ducks in a row yet? It’ll soon be time to file your tax return, and make sure your investment properties are ready for the coming year. Here are a few things that you may want to look at to reevaluate your progress and set new goals for next year.

• Have you been putting off maintenance tasks on any of your properties? Ask your tax accountant if you would benefit from getting those done this year, rather than putting them off until next year.
• Review your tenants’ lease agreements; are there any changes that you want to make when they expire? Get all of those changes made now, so you don’t have to rush to get them done when the lease expires.
• Review your finances. Are there any mortgages that you want to refinance? Probably not at the moment, with the tightened restrictions on financing requirements, but it’s a good idea to get in the habit of looking. See if you can get a lower rate on your insurance. Have you paid (or are you ready to pay) your property taxes?
• If you haven’t already, get all your tax preparation done. Gather all of those receipts, balance your accounts, and put it all together so you have it ready for your tax accountant. There’s nothing worse than trying to scramble a week before the deadline to get every receipt for the past year together.
• How’s your business running? If you have a website, are there any goals you want to meet with it? Is it time for a new design? Are there any new business tools you have been wanting to buy? Have you met your goals from last year? Make sure you sit down and write up your business goals for the next year. It may be helpful to pull out your original business plan for property investing. Compare your original plan to how you’re doing now; this allows you to make sure you’re on the right track, or if there are any changes you need to make.
• Last, but not least, evaluate who you hired for property management. Essentially, ask yourself the following questions:
  • Are you happy with the quality of their services?
  • Are they doing everything you need them to do?
  • Have they leveraged the appropriate technology?
  • Have you received any complaints from tenants (prospective or actual)?

If any of the answers to the above questions are “no”, then you may want to shop around.

Real estate investment offers many benefits. Perhaps the most enticing is the tax deductions that are available to property owners. Real estate investment is seen as a business, so you get a few more breaks than if you’re just a residential home owner. This allows the protection of all your investment income from being overly taxed. The following lists some tax deductions that are available to real estate investors.

1. Mortgage loan interest can be deducted on your tax return, just like it can for a regular home mortgage. This is very convenient, as it allows you to offset some of your income from that property!
2. Everyone has to pay the dreaded property taxes, whether you own residential property, commercial property, or empty land. Luckily, these taxes are tax deductible for investment property owners.  Obviously, the higher your property tax bill, the greater the tax savings.
3. If you’re a home owner, you can’t deduct your home owner’s insurance premiums. However, if you’re an investment property owner, you can! The premiums you pay to cover your real estate investment properties are deductible on your tax return.
4. I’ve said before that you often have to do a lot of repairs and renovations on bank owned properties. The repair costs, as well as regular maintenance expenses, are also tax deductible on your tax return. Examples of these kind of expenses include repairing a damaged ceiling or repainting the walls. Maintenance costs can add up fast, especially on older properties, so being able to deduct those expenses is a very important benefit of owning investment real estate. Keep in mind that property improvements are treated differently than repairs or maintenance. These are counted against any gain when you sell the property.
5. In accounting, depreciation represents a gradual decline in value of an asset over time. You can depreciate your real estate investment property on your taxes, therefore reducing your taxable income. Realistically, we all know that homes actually appreciate (rise in value) in an optimal market; however, the IRS requires depreciation to be recorded over a set period of time. This depreciation is strictly on paper; it doesn’t affect the property’s market value. Current regulations require residential properties to be depreciated equally over a time period of twenty-seven and a half years, while commercial investment property must be depreciated over thirty-nine years.

Have any other questions about the benefits of buying investment property? View our foreclosure listings to see our current selection of Florida foreclosures.

Before applying for a business loan, you’re required to complete a business plan to present the feasibility of your plan. In addition, a business plan is a map; you can check this map periodically to make sure your business is on track. Real estate investment is a business, and as such, should have a business plan.

As the old adage goes, “To fail to plan is to plan to fail”. When starting your real estate investment portfolio, it’s extremely important that you have goals, and a plan to reach those goals. Remember that your investing is your business, and it should be treated as a business.

The reason that so many people fail at new business attempts, including real estate investments, is because they don’t do their research and don’t create goals, or the plan to reach the goals. Talk to our agents here at Realnet; we can help you find Florida foreclosures, REO properties, bank owned properties and other cheap houses for sale.

When designing a business plan for property investment, you should include what you want to accomplish, the types of properties you’re interested in, what steps you’ll be taking to get there, and some type of time schedule for reaching your goals.

Even if you don’t require start up funds for your investment venture, developing a business plan will help you stay on track and protect your funds. Keep in mind throughout your investing adventure that your business plan may be altered; after all, it’s not set in stone. What you should do is check your business plan periodically to see what needs to be changed, make sure you haven’t strayed from your original plans, and to monitor your progress.

With the help of Realnet’s experts, your business plan will contain the perfect investment strategies for your goals. We can help you find the perfect properties to add to your real estate investment portfolio, and help you become a successful real estate investor. So contact us today to get your future in real estate investment started!

The stock market is very unstable…if you’re lucky, it’s up, but you never know when it’s going to go down. Real estate investment, on the other hand, is very stable; and with all the foreclosure listings available in today’s market, the opportunities are endless. If you’re ready to invest, it makes sense to think about starting your real estate investment portfolio. Because you’ll be spending your hard earned money, be sure you have a strategy in mind; don’t just buy up all the cheap properties you find. Here are a few real estate investment strategies to get you started.

One investment strategy is to bargain shop. When you’re buying a car, you look around to find the best price, right? Well, do the same thing with your properties. Shop around, make sure you evaluate the investment before you make an offer. This investment strategy is a popular choice now, especially because of all the foreclosed properties. The best bargains are properties priced at 20-30% below market value.

A foreclosure auction is a great place to begin your search. Foreclosure auctions are put on by banks, whose only goal is to get rid of the bank owned properties as quickly as possible. They aren’t interested in making a profit because their only concern is getting cash for it.

Another popular strategy is to purchase properties at their current market value. How can you make money this way? Well, you don’t buy just any house…look for one that has unrealized potential; something that you can add, fix or renovate to increase the property’s value. If you choose this method, the general guideline is that you should be able to increase the value by 20% within 6 months of purchase.

An investment strategy (if it could even be called a strategy) that you should avoid is to purchase any house with the expectation that its value will appreciate. Many would be real estate investors make the mistake of assuming that a home will always appreciate, so they buy properties then sit on them and wait. It’s important to do your research; there are so many factors that affect the value of a property: location, other sales prices in the area, etc. As with any investment, always do your research.

At Realnet, we are experts when it comes to real estate investment. Whether you just want your investing questions answered, or you want a short sale negotiator, we can help!

Buying repossessed homes is one of the best opportunities available in real estate investment. Because so many people are now unable to make payments on their mortgages, lenders are becoming overrun with repossessed homes. The lenders sell these homes at a foreclosure auction in an attempt to get rid of the properties as quickly as possible. Since lenders aren’t looking to make a profit on the repossessed homes, investors can often find great homes at well below market value prices.

Also known as REO properties, foreclosed properties and bank owned properties, repossessed homes can often appear to be a great deal, but investors should be wary. Many repossessed homes need work, whether it be major repairs or simple renovations.

Before bidding on any property at an auction, be sure to thoroughly evaluate the investment. This ensures that the repossessed home you’re considering isn’t a perpetual money pit. Look at other properties in the same area and make a note of rent prices and sale prices (depending on if you plan to resell the house or rent it out for a residual income). View the property, making notes of what repairs or upgrades it needs to be marketable.

Repossessed homes are a great way to start your real estate investment portfolio. Just be smart about it. Too many investors make the mistake of seeing a house worth $100,000 for $30,000, jumping on it, then find out that it needs too much work, or it won’t bring in enough income to make it worth it. Don’t make this same mistake!

Many banks have repossessed homes listed on their websites. Here at Realnet, you can view our foreclosure listings to find the perfect property for you. When you buy through us, as opposed to buying through the bank, you get all of your questions answered. We can help you find the perfect Florida foreclosures to meet your goals as an investor.

When lenders foreclose on a property, they want to get cash quick; the fastest way to do that is to sell the property in a foreclosure auction. A foreclosure auction is a great opportunity for investors to obtain properties at well below market value.
The unfortunate part of buying a foreclosed property at an auction is that they may have other liens besides the mortgage. As with any investment property, you need to evaluate the property to make sure it’s a good deal. Do your research; look into the property to make sure that there isn’t a second mortgage, or overdue taxes. The winner of the foreclosure auction will be expected to take care of any other liens on the property.
If you go to a foreclosure auction, the auctioneer will provide you with a legal description of the property prior to bidding. In order to actively bid at an auction, you usually have to obtain prequalification for financing, but some states allow a certain amount for a deposit, with the remaining balance due within 24 hours. Each state has their own rules, so it’s important to find out your state’s requirements prior to attending a foreclosure auction.
If the foreclosed property does not sell at the auction, it gets added to the bank’s collection of bank owned properties, also known as REO properties.
You can avoid the hassle of a foreclosure auction by viewing Realnet’s foreclosure listings. We have the best investment property in Florida!

Whether you’re a first time investor, a seasoned veteran, or just looking opportunities for real estate investment, it’s a good idea to keep an eye on the available foreclosure listings. Many sites charge a fee to browse their lists; why would you choose that option when we can provide you with Florida foreclosures for free?

Have you added yourself to our First Call List? If you want the jump on new properties, contact us to get a call as our properties become available. Alternatively, you can subscribe to our weekly foreclosure listings by email. While you’re looking at our current foreclosure listings, add your email in the “Join Our Mailing List” box on the right side of the page!

The Tampa real estate market has been at a plateau since September 2010. The prices on sub $100k investment properties are no longer declining. As the media is offering a positive outlook on the economy, we have seen an increased demand in our foreclosure listings. Our First Call List has become very valuable to real estate investors. It gives you an opportunity to take advantage of the bank relationships we have developed over the past 12 years, and gives you an inside track on the newest and best deals on Tampa’s bank foreclosures.

Best of all, you can see all of our foreclosure listings for free! So add yourself to our First Call list and get the jump on other investors!

As with any investment option, real estate investment isn’t foolproof; many make mistakes that can cause them to fail. You want to avoid these mistakes so that your investments are successful and profitable. Here are some of the biggest mistakes beginning investors make, and how you can avoid making them yourself.

Perhaps the most important mistake is failure to plan; it’s very important to set goals, then make a plan to reach those goals. Oddly enough, many wannabe investors skip this step, and simply start searching foreclosure listings, throwing their money at any cheap house. The problem with that is without properly evaluating an investment you can’t be sure a property is really a good deal. If the house is only $30,000, but needs $40,000 of work done, it’s not really a deal, is it?

Successful real estate investors all share three specific traits:

1. They write down specific goals.
2. They create a plan that will help them achieve those goals.
3. They follow the plan, and check their progress periodically.

So to avoid this mistake, write down your goals; are you looking to have a certain number of properties, or make a certain amount of money? Whatever your goals are, write them down, then determine what you need to do to reach those goals. A plan will also allow you to check your progress periodically, to make sure you consistently stay on track.

A second common mistake is taking advice from unknowledgeable sources. If you are looking for investment advice, you should talk to a broker; they are the ones who are going to be able to accurately answer all of your questions. Friends, family members, co-workers and neighbors all have good intentions, but making decisions based on advice from people with no knowledge of real estate investment can cost you way too much! Just remember that what works for one may not work for another.

A third mistake is buying property without researching to verify the value first. You’ll need to evaluate the investment to make sure it’s worth the price it’s listed at. You should only buy a property if the price is significantly below market value. Remember that when you’re investing in real estate, you should look at the properties as sources of income, nothing less, nothing more.

Consider the purchase price, the cost of any work the property requires, and how long that work will take. Essentially, you should ask yourself how long it will take to generate an income from this property.

Another common mistake many investors make is making emotionally based investment decisions. It’s very important to remember that when you look at investment properties, don’t buy a house because you fall in love with it; you always have to look at the bottom line: how much profit will I make?

You aren’t going to be living in the house; it is solely a vessel with which you will earn money. Therefore, it doesn’t matter if you like it! Avoid buying properties that appeal to you, unless they appeal to you for their value. This is important, not only when you purchase a property, but also later when the property becomes more of a liability and it’s time to sell. Too many investors fall into the trap of holding on to a property because they like it, long after they should have gotten rid of it.

Have questions? Contact us! We have a very knowledgeable staff that can help you reach your goals!

If you’re just getting started in real estate investment, it can be confusing to decide exactly where to start. Learning how to build your real estate portfolio is very important to your success. Luckily, it’s not hard to learn how; here are a few tips to get you started.

• Set small goals. As with any endeavor, you want to start small. Begin with one property (read more on choosing your first investment property), and once you have established income, move on to the next. Remember that investment properties often require work, so it’s best to focus on one property at a time when you’re starting out.
• Do your homework. While real estate investment isn’t necessarily complicated, you should learn as much as you can about it before you get started. As they say, knowledge is power. Here at Realnet, we are experts at short sales, Florida foreclosures, and buying investment property in general.
• Watch for deals. Before making an offer on any property, evaluate the investment. You should also determine the property value to make sure you’re actually getting a deal. After all, your goal is to make a profit, not be saddled with a money pit!
• Learn what your resources are, and make good use of them. While you’re learning about real estate investment, find out what types of financing or other financial resources you have, renovation companies or people who can do small repair work on the property. All of this is important, so once you obtain your first property, you can get any necessary work done right away.

You can become a successful real estate investor with very little fuss. Just learn everything you can, line up your resources, and start hunting for investment property for sale! If you have any questions at all, Realnet will be happy to help. Just contact us!

You have probably heard of REO properties, but do you know exactly what they are? Simply put, they are properties that were foreclosed upon, didn’t sell at public auction and were subsequently returned to the bank. REO properties aren’t always just houses; any property, including multiple rental units, commercial buildings and vacant land can be reclaimed by the bank.

Investors can often find REO properties listed on a bank’s website; however, you have to negotiate with a loss mitigator in order to make a purpose. Once you contact the loss mitigator and set up an appointment to view the investment property, you will work directly with that person if you decide to make an offer.

Unlike other types of investment property for sale, when dealing with a loss mitigator at a bank, the process can take a while. No matter how good of a relationship you have with him or her, it’s very unlikely that your first offer on the REO property will be accepted. Remember that the bank has already lost money on the property, and their goal isn’t only to get rid of the property, it’s also to make a profit.

Purchasing REO properties directly from a bank can be a huge hassle. Many would be investors choose to buy them from private investors. Sometimes going this route can not only be a much simpler process, but can also be a less expensive path. You would have to find someone who deals in purchasing bank portfolios in bulk (which means they get the properties at wholesale prices). Because they have the advantage of purchasing wholesale properties, you can often get an excellent deal, sometimes as low as 30% under the property’s market value.

Unfortunately, when people find out their house is going to be foreclosed on, they often destroy the property, or at least do significant damage. For this reason, REO properties often need repairs and sometimes even some remodeling; therefore, it’s definitely helpful if you can get the desired property through an independent investor and save that 30%.

Of course, you also don’t have any support by choosing this method. After all, the independent investor has his own interests at heart. Luckily, Realnet has a staff of experienced agents that can help your REO property purchase easy as pie! We have experts on REO Properties, short sales and Florida foreclosures.

The EB5 Visa Program provides foreign investors with an opportunity to come to the United States and live the American Dream. Everyone knows how long and drawn out the process to get a Visa can be; but if you’re an investor, the EB5 program offers a lucrative alternative.

In an effort to stimulate the American economy while encouraging international investors, the U.S Immigration Act of 1990 created this EB5 Visa Program to attract foreign investors while creating more jobs for the American people. Approximately ten thousand slots are available each year, half of which are reserved for those who choose to invest in states with low employment rates.

If you’re looking to get a green card through this program, Florida is a great state to invest in! By investing in Florida, you can qualify for an EB5 investment visa with a minimum investment of only $500,000. Other states, such as Texas, require a minimum investment of $1,000,000 in order to qualify.

Getting a green card through this program will provide you, your spouse, and your children under the age of 21 a visa; after 5 years, all of you will be eligible to apply for citizenship. It also allows you to avoid the regular, tedious process you normally have to go through to obtain a US green card.

There are only three basic requirements for obtaining an EB-5 Visa:

• You must invest in a current business that was started after November of 1990, or establish a new business.
• You must invest a minimum of one million dollars anywhere in the United States of America. If you invest in a USCIS-designated regional center, you are only required to invest $500,000.
• The company must be able to create at least ten full-time jobs for American workers.

Today, there are plenty of businesses to choose from that support the EB5 program. A few short years ago, only around twenty regional centers operated throughout the country. As interest and knowledge of the opportunity grows, more and more companies will support EB5 investors.

There are many benefits to obtaining a visa through the EB5 program. First of all, you get permanent residency. Secondly, you don’t need to be sponsored from anyone. Perhaps the best benefit is that you don’t have to deal with backlogs and delays that can come from green card applications.

If you’re interested in investment property in Florida, Realnet has what you’re looking for. We have Tampa homes for sale and Florida foreclosures.

Bank foreclosures are the perfect choice for real estate investors. These bank owned properties are homes that the bank repossessed and didn’t sell at auction. Buying bank foreclosures is favored among many experienced real estate investors, because the price is right, and transfer is quick.

Bank owned properties can consist of residential homes, commercial real estate, or even vacant land; when the banks initially foreclose on the property, it is listed in a public auction. So why is it better to buy the properties that didn’t sell at auction? That’s easy; homes bought through auction may still have tax liens and creditor judgments, and sometimes even the owners still occupying the house. If you buy a house at auction, you’re responsible for taking care of it all.

If you buy bank foreclosures that didn’t sell at auction, you get a clear title. You’ll avoid the messy tax problems, second mortgages to pay off and aggravating evictions. Any price you pay for a property at auction only covers the single mortgage; if there are any other debts tied to the property, the purchaser is responsible for paying them.

If you need another reason to avoid purchasing foreclosures at auction, consider the fact that many states have a redemption period in which owners have the option to buy their property back from the auction winner.

On the down side, bank foreclosures usually cost more than foreclosures sold at public auction. On the flip side, because foreclosures bought through public auction can be tied up by many factors, bank owned properties are much more attractive to many investors. You have a clear title, and are able to take immediate possession of the property.

Now that you know why you should be looking at bank foreclosures as opposed to fresh foreclosures on the auction block, let’s discuss how to get the best deal. The price on new foreclosure listings are usually at a set price. Look for properties that have been listed for at least a month; the longer a foreclosure has been on the market, the more open the bank will be to negotiation.

Locating good deals on bank foreclosures takes time, but it’s well worth it. Remember to carefully evaluate the investment before you spend any money. At Realnet, we have investment property for sale and can help you find the best deals available. View our selection of Florida foreclosures and let us help you find the perfect property!

One of the dangers when becoming involved in property investments is making sure you can make a profit. After all, the whole point is to make money, so you don’t want to blindly buy homes without crunching some numbers first. To calculate the return on your investment, you’ll need the gross annual income of the property and the annual expenses the property will incur.

There are several calculations you can use to measure the potential success of your investment: yield, gross rent multiplier, debt coverage ratio and cash on cash return. Here’s how to calculate each, as well as how to interpret them.

Once you have the required numbers in hand, you can begin by determining the yield. The yield is the most basic analyzing calculation; to calculate, divide the gross annual income by the sale price. While this doesn’t give you much of an idea of its economical value, it does give you a general percentage that you can expect to receive back in profits. The higher the result, the better.

Another good thing to know is how long it will take you to earn back what you spent on it. The Gross Rent Multiplier, or GRM for short, is used for this purpose. Simply divide the sale price by the annual rental income. In this case, the lower the number, the better.

The Debt Coverage Ratio (DCR) is most commonly used by lenders, but it can provide a good overview of how well your property will be at covering its expenses. Essentially, this calculation will provide how much money in excess of the mortgage payments the property will net. Divide its net annual operating income by the annual mortgage payments.

Don’t forget to subtract maintenance costs from the rental income!

When lenders view the DCR, they like to see at least a 1.25, so if your property is at 1.25 or higher, you’re in good shape.

Last, but not least, we come to the Cash on Cash return (COC) calculation. This one tells you how much cash you’ll get from the property in a year, as opposed to your initial investment. To begin with, you need to calculate your cash flow prior to taxes. Subtract the mortgage payments from your gross annual income to get this number.

Now divide that number by your initial investment. If you put a down payment of $30,000 on the property and have a mortgage for the rest, then your initial investment is $30,000. The COC gives you a more accurate view at the actual return than the yield calculation, but remember it doesn’t take into effect all factors.

All of the above give only a basic idea of a property’s potential. Remember to also consider things like property taxes, equity and other factors.

Realnet has experts to help you weigh your options. We have Tampa Bay real estate foreclosures and other investment property for sale. Have questions? Contact us today to get all of your questions answered!

Real Estate Investment Trusts, or REITs for short, are great options for people without a lot of capital who wish to invest in real estate. These specialized companies buy and manage a variety of properties, from shopping malls to apartment buildings. Each REIT company typically invests in one type of property; you just have to find one that focuses on the real estate investment you’re interested in.

REITs operate very much like purchasing stock on the stock market; you pick a company that purchases the types of real estate you’re interested in and purchase shares of that company through a broker. Unlike the stock market, shareholders of REITS typically enjoy generous dividends; by law, REITs are required to distribute a high percentage of their returns to the shareholders.

Unlike the stock market, REITs avoid double taxation because they aren’t required to pay corporate taxes.

Because the REIT company does all the work, it’s a great choice for people who may have the capital to invest in real estate but don’t want to deal with the details, such as property management and repairs.

Another advantage of REITs is that not only do they offer a great income now, they also have a wonderful growth rate! Between property appreciation and the acquisition of new properties, REITs have a great income growth rate.

An alternative to contacting a broker to invest in REITs is to focus on mutual funds that deal exclusively in REITs. On the plus side, this option allows you to invest in a variety of different properties; on the down side, mutual funds have expenses that take away some of the profits. Mutual funds provide a safer alternative to people who don’t want to play Russian roulette with their funds.

As with any investment opportunity, do your research before you spend your hard earned cash. Typically, an investment portfolio can have up 10% of their assets invested in REITs; if your portfolio is for income purposes, you may want to assign up to 25%.

Once you’ve found the ideal investment property and approved its validity for your investment goals, you need to evaluate the property’s worth. Be sure to do your own research. You can easily lose everything you’ve worked hard for if you determine the value purely by the word of the seller or the county tax office.

The following assessment methods will enable you to get a better idea of the actual value of the property prior to your purchase.

The Comparable Sales Method

The comparable sales method is the most popular for determining the value of single family homes and buildings with less than 5 rental units. Go to the local county courthouse and research how much similar houses in the same area have sold for recently. There are also many realtors that will offer their assistance, and you can do some research online as well. Be sure to account for any difference in amenities between the properties. A great way to do this is to merely divide the sales price by the square footage of living space.

The Replacement Cost Method

A less common method of determining property value is to estimate what it would cost to build the exact same property from scratch. Remember to include costs for materials, labor and property depreciation for the most accurate assessment. The easiest way to get accurate figures is to call a local contractor and ask how much they would charge per square foot to build a home in the area of your subject property.

Income Valuation Method

Last but not least, we have the income valuation method of determining a property’s value. This style is better suited to commercial properties, including apartment buildings with more than 5 rental units. It’s really easy: figure out the gross annual income and subtract the property’s annual expenses, multiply the result by 10 and you have an estimate of what the property is worth.

Knowing the approximate value of your intended property ensures you’ll have a nice return on your investment. You’ll be sure that you aren’t overpaying, especially once you take the property’s condition into account.

Are you a first time investor? Realnet can help you build your portfolio! We have a large selection of South Florida real estate foreclosures for you to choose from. Buying investment property is an adventure, and we can be your guide!

New investors are usually very eager to get started; the problem is, they aren’t sure where to get started. What kind of property should you buy? Residential or commercial? Single family or duplex? What price range should you aim for? Should you pick a specific area or neighborhood?

Obviously, the answers will depend on what you want to do. Some investors already have a generic plan in mind, and only need some guidance. Whether you have a general plan in mind or are just starting fresh, purchasing a house that you can rent out is the safest route.

Your first investment property should be either a single family home, a duplex, a mobile home, or a quad. The cash flow it offers is better if you buy one of the cheap houses for sale in a low-income residential neighborhood; the downside is that it doesn’t appreciate quickly. The reason this is the safest route is because you see the fastest return on your investment.

On the flip side of the coin, if you buy a house that costs slightly more but is in a nicer neighborhood, the cash flow from monthly rent may not be as high, but the house will have a better appreciation rate.

You’ll make an even better return on your investment if you purchase a duplex. This way, you’ll get double the rent! And if one of the units is empty, you still have the one unit making you money.

Are you a first time investor? Realnet can help you build your portfolio! We have a large selection of South Florida real estate foreclosures for you to choose from. Buying investment property is an adventure, and we can be your guide!