Lubavitch Real Estate Blog

Posts Tagged ‘Investment Property’

As we mentioned in previous posts is a real estate investment business activities we can provide good economic returns.
We raised a good business in the medium and long term investment that can represent American countries where the value of land, fields and properties are accessible edilicias joining the growing appreciation that have been taking.
But investment property in Spain also whether they are a good option. While the capital necessary to acquire a property is significantly higher than in other countries like the U.S., the results of the last twelve months indicate that companies with investment and business in this area have had a return of 5%, beyond context of crisis in the sector.
It is noted moreover that is not just speculation and buying – selling property that has more profit but which has resulted in good business has been the beneficial ownership of these properties in the form of rent or revenue. It is logical that the market is wider for the sector rents and that expand opportunities for both owners and renters.
Anyway it is stressed that this profitability is not achieved by all companies and funds that invest in this area beyond the publicly traded companies as mentioned above, please contact the property direct investment to rent. This whole picture be framed in a context of crisis in the sector, where some companies have suffered losses of around 30% in recent times, precisely, the listed companies.

Purchasing an investment property is a great way to increase net worth over time with the added benefit of cash flow from rental income. How do you know which investment property is the best buy compared to others on the market?

There are a few simple calculations one can make to value their investment property prospect. Below are details on how to calculate Capitalization Rate, or Cap Rate as well as another comparison metric called Cash on Cash Return.

1. The first step is to identify the market value of a property. This value can also be the purchase price one expects to pay for the property. A Realtor, home appraiser or tax consultant can help determine a properties value if the potential home is not already listed for sale.

2. The next piece of information needed is the Annual Net Operating Income (NOI). This is calculated by taking the expected rental income from the property over a 12 month period, and subtracting off any costs associated with keeping the home rented for that same 12 month period.

Typical costs include property taxes, management fees, expected repairs and maintenance costs, and insurance. Do not include mortgage payments as part of the cost, since Capitalization Rate is used to compare properties to each other as if they were purchased with cash. This provides a more accurate comparison.

3. To calculate Capitalization Rate, or Cap Rate, you divide the Annual Net Operating Income by the purchase price or market price of the property. Cap Rate = Annual NOI / Purchase Price. For example, if the Annual NOI of a particular property is $12,500 per year (Rent income minus cost to maintain the property), and the purchase price of the property is $150,000, the Cap Rate would be 8.3%. Read the rest of this entry »