The Real Estate Investor Center

Welcome to Real Estate Investor page. It will provide you with information on how to build your wealth through investing in income producing real estate. I am not talking about finding foreclosures or desperate sellers. Although those methods are valid and sometimes profitable, I am talking about real world methods that you can use on virtually any income producing property, in any market. Finding foreclosures and desperate sellers is also a full time job if you want it to become really profitable. Many people don’t have the time to find or acquire the number of properties it takes to be able to quit their job. Many people want to keep their current career, but would still like to maximize their wealth through investing in real estate. With these strategies, techniques and tips you will be able to aquire quality properties and establish a solid foundation for building your wealth through real estate.

In this section you will find out a quick and easy method to determine how much any income property is worth. Also discover how to access real world No Money Down Techniques and the number one mistake people make when investing in real estate. Also find out how to make sure your property stays rented consistently.

Quickly determine what an income property is worth. (Insider Secret Revealed!)

To easily determine the value of an income property, you basically use the same method as with any income producing investment. You determine value by establishing a Rate of Return. You determine what to pay for the property based on the rate of return you require your investments to pay you. For example if you wanted an 11 % rate of return, you can determine the value of the property profiled below by using the following formula:
Take the gross annual income
($750 per month)* = $9,000

Minus a 5% vacancy rate
(turnover rate) - $ 450

Equals Annual Effective income
$8,550


Less Annual Expenses (Repairs, Maint., etc.) Use 20% of Effective Income if you don’t have actual expenses. -$1,710

This Equals Net Operating Income (N.O.I.) =$6,840

NOTE: The Net Operating Income (N.O.I.) is the main number used in determining an income property's value. The N.O.I. is basically the income stream generated after all expenses have been paid, other than the debt service. In other words the N.O.I. is the cash available for debt service and profit. The idea is to have the N.O.I. be enough income to service both the annual mortgage payments and produce an acceptable profit. (11 % in this example.)

$6,840
(N.O.I.)
÷ 11%
Rate of Return Required
$62,181
Indicated Value of the Property

We have basically computed the rate of return in reverse. An acceptable rate of return to require on an income property is anywhere from 9% to 12%. I usually apply the higher percentage to the more risky properties and apply the lower percentage to the lower risk properties. For example I might use a 12% rate of return in the value calculation above for a property with a poor rental history, thereby showing it to have a lower Property Value. On the other hand I might use 9% in the value calculation for a property having a grade "A" tenant and long term lease.

By no means should this method be used as a replacement for a certified appraisal. It is simply a "Down and Dirty," rule of thumb method to quickly identify properties worthy of further consideration.

You can discover real world No Money Down Techniques, The Number 1 mistake people make when investing in Real Estate, The best way to make sure your property stays rented consistently, and many more money making tips!

I show you how to use more detailed methods of analysis and additional easy reference information in my buyer's guide. Also, there are many other ways to save money and avoid pitfalls. To obtain a concise, well-organized training and reference guide that will teach you more fantastic money saving strategies click here.