Archive for the ‘Real Property’ Category

Goa realty thru Magic Masons Goa Property Finder! View 100s of Goa properties before you buy.

Saturday, August 22nd, 2009

Goa Property Finder! View 100s of Goa properties before you buy …

Goa Property Finder. Search Goa Property with this Goa property finder. View 100s of Goa Properties before buying Goa property or Goa realestate in Goa.

 

Goa has many popular well established neighborhoods but it is a matter of your preference.

If you are buying a property in Goa to rent it out, you should ask yourself where you would like to live and rent a property in Goa.

If you are targetting to renting out your new property to the expatriate community in Goa, you should investigate to purchase a Goa property in exclusive neighborhoods.

If you are considering buying a house or condo in Goa, to sell it at a later time for a profit, you should ask yourself which locations in Goa still has affordable real-estate properties with the potential of strong growth. New townships in Goa could be a potential target for the purchase of a property.

When you purchase a house or villa in Goa, you are buying the land and as well the property that was build on the land. Of course the property in Goa will deteriorate with the years but the land the property was build on maybe worth much more, then its original value, so the more land you get when you buy a house or villa in Goa, the more it will be worth in the future. Land in Goa will always have value.

Before you buy a property in Goa, it is important that you understand the basics between a Freehold or Leasehold property in Goa.

It is important that you check out the immediate surroundings where you plan to buy a real-estate property in Goa and you should be cautious of anything near by your Goa property. You should not purchase a property near by of main roads, high tension cables, Electricity substations and as well large water drains in Goa.

If you have contacts into the construction or real estate industry, you could have an advantage if they can let you know of future developments of real-estate projects in Goa, before the general public will be aware of those new real-estate development projects in Goa.

Most buyers of properties in Goa compare prices when they shop around for a new property. You should look through Goa real-estate classifieds ads in local newspapers or search online for real-estate developers in Goa so you have a strong knowledge of the prices for the real-estate properties in Goa.

You should ask yourself the following question before you buy a property in Goa.

Is the property in Goa, leasehold or freehold and if the Goa property is a leasehold property, how much years does the property in Goa has left? How is the neighborhood of your Goa property? Are shops nearby your Goa property Has any work been done on the Goa property since the old owners moved in? Is the Interior or Exterior of the Goa property in good condition? How much you have to invest in additional work for your Goa property Will you be able to obtain a mortgage loan from a local bank in Goa?

If you are not under a time constraints, you should look as many properties in Goa as you can handle. You should visit show units from real-estate developers in Goa or if it is a property in the resale-market, visit that property as often as you can and draw up a list of pros and cons of the Goa property. If you have the time, under no circumstances should you rush in to buying a property in Goa.

You should not only look for a bungalow, semi detached house, or a condominium/apartment or residential land in Goa, but as well for a mortgage loan with a Bank or Financial Institution in Goa.

To know more visit:

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Real Estate Mfs and Reits Come Cheap

Thursday, August 6th, 2009

They say bureaucracy in India can be slower than the most patient snail. So, more than seven years after the proposal was first mooted, the Securities and Exchange Board of India (Sebi) came out with its draft guidelines for real estate mutual funds (MFs). This move has brought much joy and relief to the MF industry.

Now, the industry is out to convince domestic investors that the move could not have come at a more opportune time. In these volatile times, real estate acts as a good diversification option due to its low correlation with equity and bonds. Besides, retail investors can now invest in actual real estate projects with amounts as low as a few thousand rupees.

“Sebi’s move to launch realty MFs will not only foster diversification in the MF industry, but will also promote wider participation in the real estate sector,” says Vineet K Vohra, MD & CEO, ING Investment Management, a fund house that helps manage around $200 billion in various real estate projects around the globe.

Mr Vohra says the move will help bring the Indian market place closer to global norms. As for delivering returns, sample this… ING’s Global Real Estate Fund, which invests in shares of international real estate companies, emerged unscathed in the recent stock market turbulence.

The fund not only took the crash in its stride, but also delivered positive returns over the same time period. If you had invested Rs 10,000 separately in the BSE Sensex, BSE Realty index and ING Global Real Estate Fund on January 10, ’08, your investment would be worth Rs 7,900, Rs 5,500 and Rs 10,800, respectively , as on April 22, ’08. Sebi has given approval to two kinds of real estate funds. The first category is of real estate MFs, which will invest in real estate projects and mortgage-backed securities.

These will be closed-ended funds, listed on the exchanges. As their net asset values (NAVs) will be declared daily, investors will have the option to exit any day. So, you can now say goodbye to the old tradition of illiquidity in real estate investments. Real estate investment trusts (REITs, in short) constitute the second category of real estate funds.

These products are very popular abroad. The most common version of this class of funds allows an investor to earn fixed income like returns through rents of commercial properties . Most REITs are listed on the exchanges and have tax incentives for investors.

Put simply, REITs work like fixed income instruments (rents as coupons), while realty MFs will seek capital appreciation (like a stock price going up) by investing in properties. For years, real estate was synonymous with lack of transparency in transactions and absence of an index, making it difficult to track prices.

Various fund officials like ING’s Mr Vohra hope that the introduction of REITs in India will change all that. They are betting on such products ushering in greater liquidity to this asset class, as well as freeing up developer capital for further investment, changing the dynamics of the sector as well.

With the current real estate boom and no signs of any fall in demand for homes or offices, this may be the best time for investors to own a share of the lucrative realty sector. Real estate MFs and REITs offer the cheapest and most convenient way to do so. However, let’s hope that smoother legislative framework and a clear taxation policy will be put in place for these products, making them investor-friendly .

Real Estate Guide to Buy or Rent Whangarei Northland and Coastal Property in New Zealand

Monday, July 27th, 2009

Real Estate Investment in Whangarei New Zealand

Real estate business may be focused in so many aspects as an investment and as a method to earn money from. You can be a real estate agent and enjoy earning money while on the other hand, there are those who have the capital to earn being an investor in the buy and sell arena for a real estate business. In Whangarei New Zealand, however, there is a lot of available real estate business investment that you can get in to if you want to earn a significant amount of income from it.

Whangarei Real Estate Agent Marketing Tips

A Whangarei real estate agent in New Zealand may earn through real estate business by selling real estate property in so many ways and methods but so far, there are a few tips that I would like to give you to be able to earn good in this business. To be able to market a real estate property, you have to know where you can make such move or where to post your for sale property using the internet because we all know that the internet is the best medium there is if you are selling anything today. A few good ways to seek refuge for your product are forums and classifieds. Today there are a lot of free classifieds that you can post your for sale product. Forums can also be a good way to sell real estate. You can also try to market your real estate property using social media sites where you can post to multiple people who might just be interested to buy a real estate property in Whangarei. So far these are just a few ways and I know that there are a lot out there.

Different Real Estate Property Investment and Sale

In a real estate investment, there are a lot of different types that you can sell for interest of those who might be looking for the perfect type of property. Different people have different preferences for a real estate property that they wan to buy or rent or even lease for a period of time so to be able to allow your target clients to get a glimpse of what is there in the real estate industry in Whangarei Nez Zealand, you must have access to the different types of real estate properties being sold in the market today and make a list of them all. This is for the purpose of having each type under your profile just in case you have to present a client the different types of real estate property that you sell for choosing.

To get you an idea of what is in store if you are looking to sell real estate these are a few types. Coastal real estate, farmland real estate, northland real estate, beach real estate, resort real estate, ridge real estate and more. So far these are just a few but always feel free to make it more appealing and diverse for your clients. We all know that selling a real estate property either if it is for rent, lease or total sale depends on the choices that you can offer for your clients.

Three Common Mistakes Made By Real Estate Investors

Wednesday, July 1st, 2009

Time and time again I see the same mistakes being made by real estate investors. These mistakes create a poor foundation for the investment and can cause serious financial hardship over the life of the investment. Two of these mistakes deal with improper analysis of the subject property prior to purchase, and the last mistake has to do with having a clearly defined exit plan.

1) Vacancy – Vacancy is an often overlooked, minimized, or completely ignored property cost. Vacancy is a very real part of any real estate investment and must be taken into consideration when analyzing property. Vacancy rates vary from city to city, and many times from neighborhood to neighborhood. Good property managers track vacancy rates and are a good resource to determine local rates. Typical vacancy rates range from 5%-20% of the gross scheduled income (GSI). Sellers of investment property rarely use rates higher than 5% in their sales literature, if they list vacancy at all. As such, it is always prudent in real estate investment analysis to include an allowance for vacancy characteristic of the local market.

2) Maintenance and Repairs – Routine maintenance is a natural part of any investment property and must be taken into account in your analysis. But when purchasing an investment property, the first thing to determine is if any deferred maintenance is required. Many times maintenance rates are estimated without any consideration given to the current condition of the property. It is quite common for owners to sell homes in disrepair or when they know large expenses are looming, so it pays to have the home professionally inspected prior to purchase. Maintenance rates generally run from 5% -20% of the gross operating income (GOI). Expenses tend to be higher for older houses that have not been well-maintained.

3) Exit Strategy – Exit strategy is by far one of the most important elements when purchasing investment real estate. One must assess the motives and struggles of the current owner so they can determine the likelihood of being in the same situation when they are ready to sell. Check carefully to see if you are buying in an area consisting predominantly of rental homes. If you are, your primary strategy may be selling to an investor, who will likely expect a discount. If on the other hand, your investment resides in a solid retail neighborhood, you will likely need a real estate broker to sell it. Sales costs generally range from 6-8% if you are using a broker and 1-3% if you are not. Be aware that your buyer will likely require inspections that could reveal defects that can cost thousands of dollars to remedy. Planning and understanding your exit strategy and costs are key to building a good foundation for your investment.

Most Expensive Real Estate Markets In 2009

Thursday, June 11th, 2009

No surprise – Monte Carlo is No 1 in the Global Property Guide’s list of World’s Most Expensive Residential Real Estate Markets 2009, more than twice as expensive, at US$45,000 per square metre, as the runner up. [www.globalpropertyguide.com]

Battling for the number 2 position are prime central Moscow and London. Prime central Moscow’s US$20,853 per square metre price tag slightly outpaces core Prime London’s US$20,756 per square metre, though it is fairer to say the two cities are neck-and-neck.

London residential property prices have fallen for much of 2008, while Moscow property price declines only started in the last quarter, allowing Moscow to catch up with London. Both countries have experienced strong currency declines.

Tokyo and Hong Kong come in fourth and fifth, respectively. New York, the only US city included in the survey , is 6th, with an average price of US$15,000 per sq. m.

Completing the top ten most expensive real estate markets are two European cities (Paris at 7th and Rome at 9th) and two other Asian cities (Singapore at 8th and Mumbai at 10th). Average prices range from US$9,000 per sq. m. to US$12,000 per sq. m.

The figures are based on the average price of a 120 sq. m., good-condition high-end used apartment in the city centres of more than 110 cities around the world, typically the economic centres where most foreigners are likely to buy. Data were collected during 2008. The US dollar exchange rate used is that of January 27, 2009.



Bargain hunters’ dream


For global bargain hunters, there are several places where property prices are relatively cheap, for example parts of the Middle East, Latin America and Asia.

Cairo, Egypt is one of the cheapest cities in the world, with prime city centre prices at around US$600 per sq. m. Another Middle Eastern capital in the bottom 10 is Amman, Jordan, with average city centre prices at US$1,150 per sq. m.

Three Asian cities are included in the 10 cheapest, all located in rapidly growing and heavily populated countries, Bangalore in India, Chengdu in China and Jakarta in Indonesia.

Chengdu, damaged during the magnitude 8.0 earthquake in 2008, remains a vital economic, transportation and communication hub in the heartland of China.

Indonesia was the last country to recover from the 1997 Asian Financial Crisis. However, the economic reforms implemented by the Yudhoyono administration are setting the stage for steady economic growth.

Five Latin American cities complete the list of 10 cheapest cities for property buyers – Concepcion and Santiago in Chile, Quito in Ecuador, Managua in Ecuador, and Lima in Peru.

The same countries also tend to earn good rental yields.

Overvalued

Rental yields are generally below 5% in most European cities, suggesting that property is still overvalued.

Rental yields are generally below four percent in the following cities: Munich, Barcelona, Vilnius, Helsinki, Madrid, Rome, and Nicosia. Rental yields in Europe are lowest on Andorra at 2.2% and Athens at 2.7%.

Rental yields are between 4% and 5% in major cities such as Brussels, Tokyo, Berlin, Moscow, Copenhagen, Warsaw, New York, Shanghai, Paris, London and Geneva.

Returns from rental investments are also relatively low in key Asian cities such as Singapore and Hong Kong and in almost all Indian cities (Bangalore, New Delhi, and Mumbai)

Only six cities have rental yields of more than 10%, led by Chisinau with an average gross rental return of 14%. The Moldovan capital is followed by Cairo, Jakarta, Manila, Skopje and Lima.

High returns can also be expected in Latin American cities. Yields range from 8% to 10% in Panama City (Panama), Bogota (Colombia), Managua (Nicaragua), Santiago (Chile), Buenos Aires (Argentina), and Quito (Ecuador).

Rental yields in Kula Lumpur (Malaysia) and Amman (Jordan) are also typically above 9%.

House price movements

The recent house price boom and bust defeats the traditional notion that real estate prices are based primarily on local conditions.

The relatively low cost and ease of moving capital around the world has made it easier for people to invest in real estate markets in several countries. This is complemented by the relatively lower cost of international air transport. Several countries have also removed foreign ownership restrictions, a move encouraged by the Organization for Economic Cooperation and Development (OECD) and the European Union.

The result of these changes has been a remarkable increase in cross country real estate investments – helping make the boom, and the bust, truly global.

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Do You Need A Real Estate Appraiser When Buying A Home Or Condo?

Thursday, June 11th, 2009

If you are considering purchasing or selling a home, condo or any other type of real estate, you will most likely need the services of a real estate appraiser. An appraiser performs an assessment of properties and other types of real estate to help establish its value. While there are several methods appraisers use to establish the value of real estate (e.g. cost method, income method, and comparison method), for residential properties, the comparison method (also known as market value) is the most common approach. The appraiser’s job is to provide an opinion about the value of a property based on its “highest and best use.” If you are financing the purchase of a property, your lender will normally require an appraisal to make sure that the property is really worth the amount loaned.

The real estate appraiser is tasked with carrying out a completely objective assessment of a property and will normally provide a written evaluation report. This is accomplished by a physical inspection of the property, as well as a comparison to other similar properties for which the value is already established. To make a determination about value, the appraiser gathers details such as the size of a property, size of the lot, location, condition, best use of the property, amenities, etc.

After this initial inspection, the appraiser may scout the neighborhood to compare the property with other similar properties in the neighborhood by age, size, price range, etc. The appraiser then gathers additional data from several sources such as the local Multiple Listing Services (MLS), which provides information on current and recent comparable sales. The appraiser also gathers information from his/her own past experience in the local market. All of these sources of information are taken into consideration while writing the appraisal report, which will provide an estimate about the value of a property.

There are many reasons to use the services of a qualified appraiser. When purchasing real estate, an appraisal provides you with a negotiating tool and helps ensure that the price you are paying is appropriate. If you are selling your property, the appraisal will help you determine an appropriate price range. Besides real estate and mortgage transactions, you may need to order an appraisal to lower the tax burden (assuming the value is really lower than the value established by taxing authorities), to establish the replacement cost of insurance, to settle an estate, etc. An appraiser only gives an estimate of the value of the property. A real estate appraiser is not to be confused with a home inspector.

If you are considering buying or selling a home, condo or any other type of real estate, you can use the services of a qualified real estate appraiser who will provide an estimate of the fair market value of your property.

Invest in the Most Exciting Indian Real Estate and Get Burgeoning Returns!

Tuesday, June 9th, 2009

The Indian Real Estate market is considered the most exciting and constantly improving market in Asia.

As India’s economic growth curve rises, real estate in India has emerged as one of the most appealing investment areas for both domestic and foreign investors.

A survey by Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young has predicted that Indian Real Estate industry is poised to emerge as one of the most preferred investment destinations in next few years.

Indian real estate has huge potential demand in almost every sector especially in commercial, residential, retail, industrial, hospitality, health care etc.

But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.

The main growth thrust is coming due to favorable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and also the favorable reforms initiated by the government to attract global investors.

Selling and buying Indian property is now considered as the most profitable and attractive business opportunity New demands have added to strength of real estate markets across the commercial, residential and retail sectors in India. Rapid growth is taking place in both residential and commercial segments that is attracting huge investments in Indian real Estate.

Lower interest rates, better job prospects, and increasing nuclear families have given a boost to residential properties in India. The net yields on residential properties are 4-6%. Capital values in the residential sector have risen by about 25-40% p.a in the last 2 years.

The Retail market has been growing due to increasing demand from retailers, higher disposable income and opening up of FDI in Retail. In this sector, the capital appreciation is close to 20-35% p.a. Changing consumer behavior combined with increasing disposable incomes will ensure further growth of retail sector in India.

In the last one year, capital values of the commercial office spaces have gone up by 40% owing to the increase in demand from IT / ITES and BPO sectors across major metros in India.

The booming IT industry has also resulted in a large number of young investors who with high income jobs chose real estate as an investment option.

Moreover, as real estate sector expands beyond the city limits with government promoting industrial belts, real estate developers are eyeing Special Economic Zones (SEZs) as an extension of their business.

Several upcoming special economic zones are also expected to provide the momentum to the commercial office space development in related area where the land comes cheaper, and a SEZ developer is entitled for tax exemptions.

Thus, the Indian Real Estate industry is lined up for a complete revolution.

In today’s scenario, if there is any powerful investment tool that brings burgeoning financial returns, it is INDIAN REAL ESTATE !!

Property Tax Implications Of Purchasing San Diego Real Estate

Sunday, May 31st, 2009

Below is general discussion of various factors impacting property taxes in San Diego, California. The reader should consult their tax advisor for definitive guidance about property tax issues and not rely soley on the informaton below.

Property tax rates are capped in California due to the passage of Proposition 13 in 1978 (“Prop 13″). Prop 13 was a ballot measure approved by the voters of California to limit property tax increases. The legislation also mandated that any future increases in property tax rates have the support of two-thirds of the Legislature for approval. This provision dramatically limited the ability of the legislature to increase taxes.

The property tax rate in California is 1% of the assessed value of real estate, plus any bonds, fees and special charges. Properties can only be reassessed when there is a change in ownership or when new construction is completed. Unless one of these reassessment conditions exists, Prop 13 allows for annual increases of up to 2% of a property’s value.

The passage of Prop 13 dramatically limited the legislatures ability to increase taxes. Despite this, municipalities desired a mechanism to subsidize the building of infrastructure for new developments, so in 1982, the Capital Facilities Act was passed. The act is better known by its legislative authors, Senator Henry Mello and Assemblyman Mike Roos (i.e. Mell-Roos Assessment).

According to the San Diego County Assessor, “Mello-Roos districts are established by local governments at the request of a developer to finance specific public facilities and services such as schools, roads and libraries. Mello-Roos districts were authorized by state law in 1982. This law allows any public agency to establish a Mello-Roos district, which then can issue the necessary tax-exempt bonds and impose fees to pay off these bonds.” Communities or districts that impose a Mello-Roos fee are distributed throughout the County but are most common is large new subdivisions.

In addition to the 1% tax rate allowed by Prop 13, Mello-Roos fees are a separate charge on the property tax bill. The duration of Mello-Roos fees are linked to the amount of time needed to pay off the bond, which is typically 20-25 years. Mello-Roos fees range from $174 to over $3000 annually, and the average fee for San Diego communities was $1,488 in 2006.

To get a general idea about the amount of property taxes you would owe annually on a property, multiply the purchase price of the property by 1.2%. For example, if you purchased a $400,000 home, your annual tax due would be around $4,800, plus special assessments (if applicable), and Mello-Roos fees (if applicable).

Consumers should be aware that tax rates for a particular area can increase as news bonds are added or decrease if bonds are paid off. In addition, Special Asssessments (if any) for new infrastructure can also impact tax rates.

When considering the purchase of real estate, single-family homes, condominiums or townhomes in San Diego (particularly in newer communities), propspective buyers should find out if the property has Mello-Ross or other Special Assessment fees, how long these fees will continue, and if the fees increase annually.

Over 1 million tax bills are sent out every year in San Diego County by the County Tax Collector. The tax period in San Diego covers the period from July 1st to June 30th. The amount owed is based on the assessed value of the property as of January 1st. The tax bill is mailed out in September or early October, and is due in two equal installments; first payment is due December 10th and the second payment is due April 10th. State law does not allow for extensions to pay the tax bill and late payments are subject to a penalty of 18% APR. For those wishing to pay by credit card, the Discover Card is the only option at this time.

For more information about property tax issues in San Diego or to obtain a definative answer to your property tax questions, contact the San Diego County Assessor or your tax professional.

Real Estate Photography- Ultimate Exposure to Earn Profits From Your Property Firm

Saturday, May 30th, 2009

Real estate photography is a new, exclusive initiative to promote international property business to inspire by the theme Development, Nature and Architecture. Real estate photography leads to increased competition in the photographic market. Most of time people would likely visit their property for sale because of the attractive images.

Tips of good real estate photography

- A good source of light.

- Wide angle lenses make real estate photos appear spacious, inspirational and motivational

- Digital formats cut down on printing and developing expenditures and makes photos available immediately.

- Same images should be available in different sizes so that according to the specifications you can provide it.

- take a shot of every part of house for sale including living room, kitchen, dining room, and other parts of the house.

- highlight the best features of your house.

- clean the entire house before taking its photos.

- hire a professional real estate photographer.

Real estate photography is of following kinds:

- Standard real estate photography,

- Elevated pole real estate photography,

- Exterior twilight real estate photography,

- Interior real estate photography services,

- Real estate photography for builders and architects.

Real estate firms have totally booming nowadays. If you are a property agent, you have probably faced a lot of competitions. Over few older years, when all you require is a well written advertisement to sell a real estate. Currently in order to fully publish your listings, you need to attach a good real estate photographs. With the emergence of digital cameras, the realestate that you are selling can be photographed and placed online. Potential purchasers from different parts of the world can actually see your listings with the images in it. Don’t underestimate the value of these photographs because a purchaser can definitely decide to check out the real estate based on the pictures that you have.

Real estate photography makes the property images impressive. If you have a house which looks unattractive and you want to sell that but because of appearance no good investor wants to buy it. Through the technique of real estate photography you can make your house to appear better and most of the investors search online for real estate images to buy it. Based on recent estimations, the number of individual searching home for sale online has increased. Almost half of these property seekers found their dream property instantly online through the help of real estate photography. An image is worth a thousand words. Especially when your words may be limited by the Multiple Listing Service use real estate photography techniques to express your quality difference in properties.

Run the Numbers Before Buying an Investment Property

Thursday, May 28th, 2009

People talk about running the numbers before buying an investment property, but what are the numbers and how do you get accurate numbers? Running the wrong numbers can make the difference of making $500 or losing $1000 per month. In this article we will go through the costs and factors to consider to make your investments successful.

RENTAL INCOME

Rental income is not as straight-forward as it seems. Sometimes properties are under-rented and sometimes properties are over-rented, so be sure to find out the market rents when you consider a property. When we bought our first fourplex, we looked at comparable leases and realized our rents were too high, so instead of assuming we would continue to receive $3600 of rental income, we had to be realistic and assume it was more like $3200.

MORTGAGE INTEREST

A huge cost is mortgage interest. You should definitely sort out the details of your loan options and get an idea of current rates before running the numbers. It could make or break a deal. If you are getting a duplex or a house, the loans are generally similar to other home loan programs. Triplexes and fourplexes tend to have higher rates, and commercial is a whole other ballgame. One thing to consider is to put more down because the more you put down, the less your loan will be, which means less monthly interest to pay. Another consideration is the type of loan. We usually recommend for people to get a fixed rate mortgage these days because the current ARM (adjustable rate mortgage) rates are not all that much lower than fixed rates.

Basically, just get educated about the loan options and run the numbers with them. Oh, and also, do not just take advice from one mortgage person. The best way to get educated is to talk to a variety of mortgage brokers and banks to find your best solution; not all loan places have the same programs.

TAXES

People frequently use the taxes from the year when they purchased the property, assuming the taxes will stay the same. Taxes change every year. Taxes can go up drastically after a purchase. For example, an owner occupied property usually has tax breaks, so unless you intend to owner occupy too, your taxes will go up.

Also, the county appraisal that your taxes are based on could go up after your purchase. For example, if you buy a property for 100,000 but the tax appraisal last year was for 50,000, don’t count on it remaining at 50,000. In fact, I have seen cases where a year after a property was purchased the tax assessor increased the appraisal value to the purchase price. The safest approach is to look at the tax rate and the purchase price to determine your future taxes.

VACANCY COST

For some reason people tend to forget to take into account vacancy rate. Even when looking to invest in a desirable rental area, it’s best to always take into account at least an 8-10% vacancy rate. Do some investigation, look at your market and find statistics on the average vacancy rate.

TENANT TURNOVER COST

We have personally found the biggest surprise to be the expense of tenant turnover. This includes advertising for a new tenant, cleaning, repainting, replacing carpet, etc. If you expect to have high tenant turnover, like next to a college campus, anticipate this to be a significant cost.

INSURANCE COST

Insurance on investment properties are typically higher than owner occupied, single family properties. So get an insurance quote on

the property instead of basing your expected insurance off of the insurance bill for your house. You also should purchase liability insurance which can be expensive.

MAINTENANCE COSTS

This is by far the most difficult number to estimate. It depends on the property, whether you fix some of the problems yourself or hire outside help, and random luck. So we can’t give you a hard and fast number but we can look into different factors to take into account.

**Property Type – When you evaluate different properties remember to take into account the type of property. If it’s brick you won’t have to paint or worry about wood root. Decks need constant maintenance. A property with wood or concrete floors will be easier to clean and will not have to be replaced when a tenant moves out. Just think about the aspects of the property and their maintenance costs.

**Property Size – A smaller property is easier to maintain than a larger property. For instance, say there are two properties for sale for 200,000 and each have a combined rent of 2000. A property with 2 units and a total of 1000 square feet will be cheaper to maintain than a property with 6 units and 3000 square feet. The larger property will be more expensive to maintain when you are replacing the larger roof, painting the interior walls, etc. Also, more units mean more money spent on advertising, make-readies, and more appliances to repair.

**Property Location – Consider your proximity to the property. If you buy a property 30 miles away, over the course of a year you can spend a decent amount of gas money driving back and forth.

**Your personal management style – How often will you do maintenance work yourself vs hiring help? For instance, when a unit needs painting will you paint the rooms or hire a painter? Hiring professionals is definitely more expensive, but you have to be realistic about how much you will personally do, especially if you are looking at a lot of units.

UTILITY COSTS

Be sure to check what the tenants pay for and what the owner pays for. This includes all the utilities and lawn maintenance. In addition, there may be owner expenses like parking lot lights and trash bin service.

PROPERTY MANAGEMENT COSTS

If you are going to hire a property management company, definitely get their rates. We personally choose properties that we can manage ourselves.

SUMMING THE NUMBERS

We wrote a investment property calculator which is located here Real Estate Calculator . Once you add all the numbers up, you often find the property has 0 cash flow or even negative cash flow. This doesn’t necessarily mean you should not purchase the property. There are positive tax benefits to rental properties and depending on your situation, a property with technically 0 cash flow could still put more money in your pocket due to tax benefits. Also, if you think the property is going to appreciate in the future, a zero or negative cash flow property could still be appealing.

The point here is that if you are buying a property with zero or negative cash flow, it’s best to know beforehand instead of after the property has been purchased.