In today’s market investors are in for a huge challenge if they want to stay ahead of inflation while still maintaining a profit. As markets shift so do viable locations for continued cash flow. At Updegraff Group we recommend budgeting 35% off the gross yearly rents to account for property management, a vacancy factor, capital expenditure and repair reserves. This will result in your net operating income (NOI) which you will use to pay for monthly liabilities like taxes, insurance, and any utilities or services. The money you have left is true cash flow and divided by total investment will result in your “cash on cash” return. By adding leverage you can amplify this as long as the cost of borrowing is less than asset’s return.
However, in today’s market it is difficult to write a financed offer on a good deal and get it accepted. To be competitive within the market, look into ways to raise funds through syndication, borrowing from retirement accounts, and extending credit lines to offer cash and maximize your market exposure. If you buy right, you’ll be able to finance back out at 100% and higher. If you need assistance, don’t hesitate to contact us anytime at Updegraff Group.
How to identify my market?
Start by calculating your highest cash offer possible, this becomes your baseline cash market. You then calculate what your highest financeable market would be based on your cash reserves. This becomes the highest priced market at which you can compete while also optimizing amplification of your gain.
These are the two markets you watch like a hawk. Your “cash offer market” and “highest financeable market.” The analysis of the historic data must be multi-dimensional (temporal as well as geographic) and performed in real time for both markets. Deployment of capital from an asset management perspective is where you want to gear your thoughts. In order to do that you have to have an opinion of where the market is heading, how quickly, and why.
Those that do not accurately gauge how markets are changing are completely in the dark when it comes to making a sound decision in real estate investment acquisition and desposition. Trust your local Updegraff Group professional to walk you through your purchase while explaining the nuances of your particular market. Location and goals when combined are the downfall of the most wanna-be investors. They set lofty goals for incredible locations and don’t understand the fundamentals of the market.
Well, what are the fundamentals of the market?
The market is set by buyers and sellers. & You only make money when you buy.
Do I sell?
If it makes sense you sell, absolutely. Because we’re in a game of optimizing exposure it is important to keep in mind great deals also come in the form of flipping, where a hold position may not yield favorable results. These returns while short in nature can really add up, however the buy and hold action will set in motion a passive investment that continues indefinitely over time with no need for reinvestment.
Do I buy?
The current market still has plenty of great opportunity for sophisticated buyers. How do you become as sophisticated buyer? Drop by 100 Liberty Pole Way Rochester NY 14604 and we’ll teach you. It won’t take long before you’re up to speed and ready to dive in with confidence. If you read our reviews you’ll see that we’re serious about our job and enjoy seeing our clients succeed.
What do I buy?
Location is the only thing you cannot change about real estate. Spend the most mental energy on the WHERE of the equation. Admit if you don’t know the market and rely only on the current market facts analyzed historically through time. Overlay factors like inflation, job growth, building development, and public projects as you project into the future.
What are my odds of being successful?
It depends on if you start at Updegraff Group!