Real Estate can seem like a complicated business with many inputs. Let's work together to find the perfect investment vehicle to build long term wealth!
How much money do I need to invest?
Generally speaking, financing is available for up to 75%-80% of a property's value. Financing can be done through a traditional bank, mortgage broker, or even a credit union depending on what type of property you are acquiring.
How do I know if I can get enough rent to cover my mortgage and expenses?
This is an extremely important consideration. With enough market research (Zillow "For Rent" listings, Craigslist, other investor experience etc.) we can build a pretty reliable model for property operational cash flow and make sure you are getting the return you want.
What is a good Return on Investment (ROI)?
ROI depends on what type of return formula you prefer. Many large investors use something called a "Cap Rate" that stands for Capitalization Rate. Simply put, the Cap Rate is the Net Operating Income divided by the property's value (or price to acquire). Large corporations use this metric to decide what the long term returns are expected to be. This number is also used to determine a property's value.
Personally, I prefer the 'cash-on-cash' methodology. Under this method we only consider the down payment as the initial investment, not necessarily the property's value. This method will allow us to compare our Real Estate Investment to other investment vehicles such as stocks (and their associated dividends), bonds, interest from a bank, income from a small business and others. In investment real estate it wouldn't be uncommon to see cash-on-cash returns of 20%-30% depending on the type of property.