UP CLOSE & PERSONAL
STREET SMART
The Deciding Factors OUR STREET-SMART PANEL DISCUSSES WHAT TO CONSIDER WHEN LOOKING FOR MAXIMUM ROI IN RESIDENTIAL PROPERTY INVESTMENTS.
it to be invaluable to my real estate business and practice. Your analysis will entail various financial as well as non- financial considerations. Among financial data to evaluate are price, down pay- ment, interest rate, rental and vacancy rates, operating expenses, net operating income, capitalization rates, repair costs, cash-on-cash return, gross rent multiplier, property taxes and appreciation. Ideally, the seller will provide you with accurate, histor- ical information. In addition, you should research the comparables for price and rental rates. The MLS, Zillow, Realtor.com and RealtyTrac are a few of the valuable resources that are readily available to provide some of these answers. The nonfinancial analysis is equally important. Consider the following variables when evaluating your hometown or other geographical areas for investment: school district, crime rates, employment rates, neighborhood business, traffic, distressed and REO properties, job creation, wage gains, technology trends and stability of the local economy. There are many resources—some requiring a fee and others available for free—that can help provide valuable listings and ranking of cities, towns and Metropolitan Sta- tistical Areas (MSA). One that I like and value is the Milken Institute's annual study, “America’s Best Performing Cit- ies—Where America’s Jobs Are Created and Sustained.” Once you have gathered both financial and nonfinancial data, I suggest you create a side-by-side table that allows you to rank, compare and total one town versus another. • WEB :: www.synergywisconsin.com PHONE :: 608-438-6371
Before getting into the specifics of how I decide where to invest for maximum ROI, I would like to take a step back and look at the bigger picture. The answer to this question can be addressed by methodically plugging into a five-step process. 1 FIND How easy is it to find the right prop- erty with the right terms and the right price in a given geographical area? 2 ANALYZE
SCOTT SKLARE SYNERGY REAL ESTATE GROUP
Your analysis entails both financial and nonfinancial variables. Do the numbers and terms make sound investment sense? Do the nonfinancial variables point in the right direction? 3 BUY Can you get financing in that market space, whether it is private or conventional financing? 4 MANAGE/FIX Who is going to manage or fix the property if you hold or sell? If the location is a distance from where you reside, you will have to hire a professional property manager or rehabber. 5 GROW/SELL Do you envision growing your portfolio in a particular geo- graphical area? Let’s delve deeper into Step Two: Analyze. After all, if the numbers do not work, everything else is moot. I recommend you find software or an app to simpli- fy the process. Of the many out there, I like RealData (www.realdata.com). I have used it for 30-plus years and find
102 | think realty magazine | may :: june 2016
Made with FlippingBook Online document