Quick Property Analysis

Written by Marc on March 1st, 2007

Have you ever looked in the paper, online, or at a realtor at real estate listings and were unsure which ones would be a valuable investment? Usually, the only way to tell if you will get a good return on your investment is to crunch some numbers and determine if the property will have a positive or negative cash flow. Use this quick property analysis method to narrow your search to good investment property candidates.

Basically, the whole purpose of this test is to separate the properties that should have a positive cash flow (make you money) from those properties that have negative cash flow (cost you money). It will eliminate some of the good ones, but it will give you an excellent list of good properties to invest in. Just follow the simple steps laid out below:

  1. Find out what the current rent that is collected at the property you are analyzing. If there is more than one unit (for example an apartment building) add the rents for all the rental units together. We’ll call this the total rent collected.
  2. Divide the purchase price of the property you are analyzing by 100. Call this number the minimum income level.
  3. If the total rent collected is greater than minimum income level then the property is definitely worth more analysis.

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