How to Analyze a Real Estate Deal
Manage episode 426483557 series 3558878
Investing in real estate historically has been a tried-and-true method of building wealth over the long-run, if you have the right wherewithal and mentality to do it – Let’s face it, it takes work.
However, as with any type of investment, investing in real estate has its own set of risks.
Without proper analysis, you can lose a lot of money even if you accept what looked like a great deal. Or, you might be generating minimal cash flow that could have been a lot more cash flow if you were better prepared when analyzing your real estate deals.
In this episode, we show you how to analyze a real estate deal and compare it with other investment opportunities.
More specifically, I discuss:
- Real estate is a numbers game
- Some of the risks involved with real estate investing
- The “4 Return Components of Rental Real Estate”
- The potential tax benefits of investing in real estate
- Analyzing a real estate deal
- Using your analysis to help you make decisions
Resources:
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Key moments are:
00:00 Real estate investing has inherent uncontrollable risks
04:07 Critical components of real estate investment analysis
07:25 Hypothetical 20% return on property investment
11:26 Consult a tax advisor for potential write-offs
14:17 Avoid negative cash flow with proper monitoring
18:27 Using analysis for hypothetical $650,000 inherited property
21:36 Low rate of return, mortgage doesn't matter
23:14 Conservative 4% annual appreciation yields $26,000
27:26 LPL Financial offers advisory services, consult professional
28:57 Municipal bonds tax free, consult advisor, no guarantees
52 episodes