Real Estate Investing For Dummies by Eric Tyson & Robert S. Griswold

Author:Eric Tyson & Robert S. Griswold
Language: eng
Format: mobi, epub, azw3
ISBN: 9781118948224
Publisher: Wiley
Published: 2015-03-02T00:00:00+00:00

Chapter 12

Valuing Property through Number Crunching

In This Chapter

Getting a return on your investment

Understanding the mysteries of Net Operating Income

Delving into cash flow

Looking at three basic approaches to valuation

Determining what you should pay for a property

With the help of your real estate team, you should narrow your real estate investment opportunities down to just those properties that seem to have the best chance to produce financially in the long run. In Chapter 11, we cover the basics of property valuation and provide you with the information you need to examine the leases of prospective properties.

In this chapter, we get down to the business of running the numbers. We cover the essential elements of understanding and arriving at a property’s income and expenses and Net Operating Income — and we explain what that is! We then take these important numbers a step further and show you the best valuation tools traditionally used by appraisers and commonly used by lenders to determine what a property is worth.

But after you’ve done all of your research and analysis, the reality is that you still need to establish whether a proposed property has the potential to be a good investment opportunity. Overpaying for a good property isn’t any better than getting a deal on a bad property. Neither will meet your goals. So we close the chapter by putting it all together to help you decide how much you should consider paying for a particular property.

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