Join our FREE Investing in Real Estate Class Sign Me Up
Select Page

So you want to invest in Real Estate?

by | Oct 23, 2009 | How to Guides, Uncategorized

With winter coming and investors flocking back into real estate I wanted to give you my short guide to investing in real estate.

Benefits of real estate:
1. Leverage: You can borrow most of the money needed to buy the asset
2. Insurable: Insurance protects your asset
3. Income and Appreciation: If done right you can make money every month and then more when you sell or trade
4. Taxes: Depending on your status you can write off some or all of the depreciation of buildings [check with your CPA]. You can also do a 1031 exchange and defer your capital gains if you re-invest in more investment real estate. [again, see your CPA or 1031 exchange facilatator]

How it works: Investing means making more money than you’re spending and here’s how you do it.
1. Rent: You rent the property for more than it costs you to own and maintain the property. This is called positive cash flow. Here’s how you figure it out.

Take the Rental income and subtract the following:
1. Vacancy
2. Property Taxes
3. Insurance
4. Management
5. Repairs/Maintenance
6. Utilities
7. Misc
The sum of these things gives you your NOI or Net Operating Income

Take your NOI and minus your mortgage payments
The sum gives you your cash flow

You can take this a step further and see your pre and post tax cash flow as well.

I can give you a detailed analysis that will give you many more metrics and fancy acronyms if you make certain assumptions about the future, like appreciation, vacancy, changes in cost of expenses, etc.

Basically – you just need to use the best info you can get, be realistic about costs and vacancies and make sure you have more money coming in than going out.


Learning Center:

Advice, Opinions, and Market Reports about the Oregon and Washington Real Estate Market

Portland Luxury Condo Market Analysis

  2020 was a rough year with the pandemic, social unrest, and the closure of many restaurants and retail businesses. Nowhere was the impact more acute than in downtown urban areas across the country. Read the full  luxury condo report here to view the pre and post...

How To Buy & Sell at the Same Time

  How to buy a home when you already own a home: Have you been dreaming of your next home, but you’re not sure what to do with your current home? You’ve heard that it’s a sellers market, but what does that mean if you also need to buy?  There are three options to...

How To Retire for Real Estate Agents

Our CEO and Best Selling Author of The Golden Handoff, Nick Krautter, talks with Justin Stoddart on the Think Bigger Real Estate Show to review his revolutionary model that helps real estate agents grow their business while simultaneously helping other agents rapidly...

Start Your Search Today

For a Confidential Meeting contact:

Nick Krautter, CCIM

Principal Broker in Oregon/President

Managing Broker in Washington