Buying an Investment Property
The economics of buying an investment property are pretty simple. Figuring out your annual profit or loss on a property boils down to just a few pieces of information. (The tools on the next two pages can get you started).
Most investors buy for more than just annual cashflow. They also purchase a property for appreciation, tax benefits and principle payback. These three profit centers can add up significantly over time. Calculating how a property performs over time is more complicated because it involves interconnected variables like interest rates, appreciation rates, vacancy rates and expenses. Give a call if you'd like to get together to model the long-term profitability on an investment property.
Most investors buy for more than just annual cashflow. They also purchase a property for appreciation, tax benefits and principle payback. These three profit centers can add up significantly over time. Calculating how a property performs over time is more complicated because it involves interconnected variables like interest rates, appreciation rates, vacancy rates and expenses. Give a call if you'd like to get together to model the long-term profitability on an investment property.
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Here is an overview of how long term modeling works. The green line represents the annual income from the property (it uses the left scale). The wedge shaped graph shows accumulated wealth (it uses the right scale). The wedge is divided into three components: cumulative income, principle payback on the loan and appreciation in the value of the property.
Longterm wealth is highly dependent on a number of variables that can be adjusted to meet your situation when we meet. Things like the number of loans, their interest rates, refinancing, property taxes and expenses, rent increase and vacancy rates all change future wealth. Together we'll try different scenarios to explore how much wealth you will gain and what risks you can withstand as we chart the profitability of your investment property into the future.
Longterm wealth is highly dependent on a number of variables that can be adjusted to meet your situation when we meet. Things like the number of loans, their interest rates, refinancing, property taxes and expenses, rent increase and vacancy rates all change future wealth. Together we'll try different scenarios to explore how much wealth you will gain and what risks you can withstand as we chart the profitability of your investment property into the future.