Investment Consulting

Investment Consulting

Investment Consulting

REAL ESTATE INVESTMENTS

 

Understand the kind of value of your investment.

When you purchase a real estate property as an investment, its value can be estimated by the expected profit on the investment. This means estimating cash flows, considering their present values, and calculating net differences as the expected profit.

However this is only the beginning when it comes to evaluating a property for investment purposes. As a potential investor, you need to understand the costs and risks associated with a real estate investment. For a comprehensive overview of a property’s worth and profit-making ability, you need our advice.

Considerations in Evaluating Investment Properties

When we conduct an investment property analysis, we will consider multiple cost factors:

  • Net Operating Income (NOI)

NOI is the net revenue minus expenses with the exception of loan costs in a particular period of time. It is the most basic measurement of an investment’s success because an investment is not earning a profit unless it has a positive NOI. However, note that NOI summarizes an investment’s performance, meaning that it needs other measurements to provide context.

  • Return on Investment (ROI)

Calculated as the profit on your investment divided by the value of the initial investment.  ROI measures whether the profit was earned in an efficient manner. If the anticipated ROI for a particular property is low compared to the ROI of other potential investment, you may be advised to invest elsewhere in order to maximize profits.

  • Cash Flow

It is important to remember that a positive cash flow is just as important as a positive NOI. This is because an investment with negative cash flow needs cash from other sources to sustain it, making it a burden as long as the problem persists. One of the most convenient tools for gauging the healthiness of an investment’s cash flow is cash-on-cash return, which determines the rate at which your cash flow can capitalize on your investment.

  • Risk

Risk exists because the outcome of an investment is uncertain. Since real estate is one of the most risky areas to invest, you need to make sure that your potential property will have returns big enough to warrant the increased risk.

  • Management Costs

Commercial buildings and rental properties require people to run them, which is a factor that costs time and money. As your real estate consultant we will estimate the amount of management that an investment property requires, based on factors such as building condition, building size, and tenant base. We can also provide cost estimates for property insurance, payroll costs, management fees, and if required, the money you can expect to spend on a property management company.

  • Future Trends

Predicting the real estate market is easier said than done, making our professional  expertise and experience essential to successful investing. 

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