1 information you need before investing in income you need before investing in income properties...

Download 1 Information You Need Before Investing in Income   You Need Before Investing in Income Properties ... 5 Information You Need Before Investing in Income Properties ... NJ 163.6 162.3 157.6 -0.8% -2.9%

Post on 28-Mar-2018

215 views

Category:

Documents

1 download

Embed Size (px)

TRANSCRIPT

  • 1 Information You Need Before Investing in Income Properties

  • 2 Information You Need Before Investing in Income Properties

    Table of Contents

    Introduction ........................................................................................................... 3

    Chapter 1 Employment Numbers ....................................................................... 4

    Chapter 2 Housing Affordability ........................................................................... 7

    Chapter 3 Cash on Cash Return and Total Rate of Return ............................... 9

    Chapter 4 Useful Analysis Tool .......................................................................... 10

    Chapter 5 Further Insights ....... ...........................................................................17

    Conclusion ........................................................................................................... 20

  • 3 Information You Need Before Investing in Income Properties

    There are several ways by which you could invest in Real Estate. You can buy

    properties in the hope of flipping them for a profit. You can also purchase properties in

    the hope of creating a passive income stream. For many, the thought of creating a

    dependable income stream during retirement is very attractive. Some of the best

    investment opportunities in the market right now are offered in Rental Income

    Property. Perhaps you havent thought about investing in rental real estate since the

    bursting of the housing bubble, but now is the right time. This is because this market is

    characterized by the following:

    Motivated sellers

    Properties that were overvalued during the recent bubble are now undervalued in

    most markets

    Many available financing options

    Government assistance

    Tax benefits

    Positive monthly cash flow

    Yes, investing in rental real estate income property could be the best type of investment

    within the next 10 years. Unlike the case during the bubble years, income property

    bought at the right price can now generate positive monthly cash flows for the

    investor. However, real estate requires a major investment of time and money. Investors

    should analyze cash flows and rates of return before buying a property, which may

    simply be the cause of a headache.

    Instead of buying based on hope, you should KNOW your rates of return, tax benefits,

    and cash flows BEFORE you buy. Calculate the optimal offer price. Analyze several

    loan options. See how different assumptions of vacancy rate and price appreciation,

    among others, affect the rate of return. Compare different rental investment

    opportunities.

    However, the question is: How exactly do you scoop up the rental real estate bargains?

    I am writing this short booklet to talk about four numbers that you must know before you

    buy any property. As for finding the bargains, thats what I and my team do. Visit our

    website, www.palmsassetmanagment.com, and see how we can use our many

    resources to get you the best deals.

    INTRODUCTION

    http://www.palmsassetmanagment.com/

  • 4 Information You Need Before Investing in Income Properties

    The first numbers that you need are employment numbers. One of the first pieces of

    data you should have is the employment data for the market that you are interested in

    investing in. What is the unemployment rate? Is it above or below the national average?

    Is it rising or falling? What are the major industries in the region? These data will help

    determine the economic stability of the city you are looking at. You want to invest in a

    city or region that is vibrant, not in an area that is in decline. The employment numbers

    vs. the national average would be a very good indicator.

    The good news is that these data can be easily accessed for free!

    Heres how you get the data:

    Go to the Bureau of Labor Statistics web site www.bls.gov

    Click on the tab labeled Subjects

    When you get a list of subjects, go to the bottom of the page, and look for

    Regional Resources

    Choose your region

    You will see a map of your region, and from here, choose the state you are

    interested in

    Once you choose a state, you will get a list of cities in this state. Chose the city you are

    interested in, and you will get a table like the one shown on the next few pages.

    EMPLOYMENT NUMBERS

    Chapter 1

    http://www.bls.gov/

  • 5 Information You Need Before Investing in Income Properties

    West Palm Beach-Boca Raton-Delray Beach, FL Economy at a Glance:

    Data Series Back

    Data

    Oct

    2014

    Nov

    2014

    Dec

    2014

    Jan

    2015

    Feb

    2015

    Mar

    2015

    Labor Force Data

    Civilian Labor Force

    691.5 691.4 685.3 688.8 (P) 685.8

    Employment

    654.1 655.4 652.5 652.5 (P) 651.3

    Unemployment

    37.5 36.0 32.8 36.3 (P) 34.5

    Unemployment Rate

    5.4 5.2 4.8 5.3 (P) 5.0

    Nonfarm Wage and Salary Employment

    Total Nonfarm

    567.0 576.9 578.5 573.1 579.4 (P) 583.1

    12-month % change

    4.2 3.6 3.1 3.6 3.7 (P) 3.7

    Construction

    29.2 29.1 29.2 28.7 29.0 (P) 28.8

    12-month % change

    5.8 4.7 5.0 7.9 7.8 (P) 6.3

    Manufacturing

    16.5 16.9 16.9 16.5 16.6 (P) 16.5

    12-month % change

    5.1 4.3 4.3 2.5 1.8 (P) 1.9

    Trade, Transportation,

    and Utilities 108.2 110.6 111.4 109.7 109.9 (P) 109.6

    12-month % change

    4.6 2.7 1.7 3.5 2.9 (P) 2.1

    Information

    10.1 10.2 10.2 10.1 10.2 (P) 10.2

    12-month % change

    -1.9 -1.0 -1.9 -3.8 -2.9 (P) 1.0

    Financial Activities

    39.0 39.7 39.7 39.4 39.1 (P) 39.0

    12-month % change

    1.3 3.4 2.3 3.7 2.6 (P) 2.1

    Professional and

    Business Services 103.8 104.3 104.7 102.7 105.0 (P) 106.6

    12-month % change

    7.5 5.7 6.1 5.9 7.3 (P) 7.8

    Education and Health

    Services 90.3 91.0 91.3 89.7 91.5 (P) 91.1

    12-month % change

    4.5 4.4 4.2 3.0 3.6 (P) 2.8

    Leisure and Hospitality

    76.4 80.0 81.2 81.2 82.7 (P) 84.3

    http://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://www.bls.gov/regions/southeast/fl_westpalmbeach_md.htm#eag_fl_westpalmbeach_md.f.Phttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=LAUDV124842400000006&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=LAUDV124842400000005&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=LAUDV124842400000004&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=LAUDV124842400000003&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484240000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484240000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484242000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484242000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484243000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484243000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484244000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484244000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484245000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484245000000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484245500000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet?series_id=SMU12484245500000001&data_tool=XGtablehttp://data.bls.gov/servlet/SurveyOutputServlet