in Real Estate (submitted 2013-10-23)

Question real estate professionals about the goodness of investing in commercial property, and you will come across that such properties are a better than residential real estate. But then the question comes how to evaluate the best properties? Well you can do it by simply following the steps below:

1) Know the insiders: to be successful, think like a professional always and try to learn what the insiders know and act accordingly, this would pave a way for more cash inflow and do keep in mind that if you are in tighter credit conditions, make sure to knock your opportunity with cash in hand, because property lenders favor more when they see at least 30% down payment before giving green signal to a loan amount.

2) Make a plan of action: before going in for any sort of deal make a good plan of actions, with set of certain parameters and top priorities. And question yourself like: How much do you intend to make on that particular deal? How many tenants are already paying you rent? How much rental spaces need to be filled? Who are the key payers?

3) Recognize a good deal: the top real estate person knows which a good deal is when they come across it. Firstly they jot out their exit strategy which means that the best deals those when you know you can walk away from them. And make sure to break out your calculator I order to ensure that the property would meet your financial goals.

4) Make yourself familiar with the common key real estate metrics: which includes:

€ NOI: That is net operating income, which is calculated by considering the properties first year gross operating income and then subtracting it with the operating expenses for the first year.

€ Capitalization rate: simply called as cap rate, it is used to evaluate the value of income producing properties. Cap rates are used to determine the total present value of future profits.

€ The big cash: investors who rely on funding to buy their properties often stick to the cash-on-cash formula in order to compare performances of competing properties. It does not mean that the investor doesn’t require 100% cash to buy the property into account but depicts the fact that the investor will not keep all the NOI because he must use some of it to make mortgage loan payments. To uncover this process, real estate investors must specify the amount needed to invest to buy the property.

5) Find motivated sellers: Remember that customers drive real estate. And your job is to sneak for them, mainly those who are always ready and eager to sell properties below the market value.

6) Discover the art of neighborhood: Study the neighborhood and its location by talking to other neighborhood owners, checking on open houses, and searching for vacancies.

7) Evaluate properties: While searching for great deals, be adaptable, Use the internet, read the ads and hire people to find you the best properties.

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