Real Estate Investing

Wenatchee Real Estate investing can be fun as well as profitable.  I have used a simple formula for the past twenty years that helps me quickly look at property with an apples to apples over view.  You will also want to look at cap rates and cash on cash basis which requires a good deal of very accurate information on net operating income.  This information should be reveiwed prior to your purchase and during your feasibility study.  Feasibility studys are normaly done on commercial income producing property or land purchase.

My formula is the first step in a process that should included your financial advisor.  I always always figure 20% down, you may pay any amount down you like but the formula requires the same numbers so you may compare all the properties you look at over time.  You may also use your own numbers but be consistant, remember mortage insurance usually is not an issue at 20% down.  Most lenders will require you pay points, I don't include this number as it varys so much between lenders and may be a one time payment.  I usually pay for property tax, insurance, water, sewer, and garbage.  Figure these numbers into a monthly payment and add number to your principal payment you can come up with using the mortgage calculator offered on my web site.  For residentail I always use an interest rate of 6% and for commercial 7%.  In past years you only had to run your numbers for 15 years.  Now I hope to find anything that would cash flow for 15 years while sellers are pricing their properties for thrity year payoff.

Example:  $1,000,000. property.  20% down.  Loan amount of $800,000. Payment at 7% for commercial  for 15 years would be a payment of $7190.63.  Add  this to taxes, insurance, water, sewer, garbage, vacancy, ect.  Lets say the number comes out to $25,000 per year.  Divide this number by 12 months.  Add this number, $2,083.33 to the principal amount of $7190.63.  Hopefully this property produces at least $9,273.96 per month.  Their are many more costs and savings in real estate ownership, this allows me to look quickly at a lot of properties.

Learn more about investing strategies here

Find out why buying in a down market may be exactly what you want.

Rates have changed since I wrote this.  Idea is still the same. Call me with questions.  Korey 509-670-2411

A Special thanks to our affliates in other areas for their vast and valuable real estate information:

Charleston Real Estate is booming! At Prudential we can make your real estate dreams come true!

Looking for Atlanta Real Estate? Contact Ben and Joshua today for all of your Atlanta realty needs!

Search HomesByLender.com to buy or sell for sale by owner Los Angeles homes.

Denver Real Estate: Our team of professionals serves the Denver, Colorado area selling single family homes, lofts and condos. Allow us to put our experience to work for you.