The only common sense approach for getting
a good return on real estate investment is a responsible buying
and budget planning strategy for those who are considering to invest
in real estate. Real estate buyer must take a full charge in managing
a household budget by carefully estimating the amount of money the
buyer would need to allocate in order to purchase and maintain a
real estate property. Regardless any sort of influence coming from
government, banks, brokers or sellers towards a home buyer, the
buyer must choose a right property, find an appropriate financing
solution, reserve a sufficient amount of money for property maintenance,
put some money aside in a case of economy downturns, continue wisely
manage other investments and financial matters. There is no magic
for finding the best long and short-term solutions for your budget
out of a real estate buying puzzle but a good and steady personal
effort.
Why is Real Estate investment a complex issue ..?
When exploring Real Estate market you may
find the process of choosing and buying a home complicated and cumbersome.
Let's just take a brief look at the numerous parameters involved
in this search endeavor.
a.
Equity progress estimate
Equity progress is based on the property market
value (where you buy and what you buy) and Home Appreciation Rate.
The speed of equity build-up produces a tremendous effect on homeowner’s
immediate and future financial balances.
b.
Financing
Suppose you do not have enough cash to bypass
a real estate purchase financing stage and, then you have to manage
a few more very common variables of a real estate buying puzzle:
Principal amount
Down payment amount
Term of mortgage
Mortgage interest rate
A variation of these variables may bring
significantly different results on a long run.
c.
Real estate property carrying expenses
Property carrying expenses is your next big
concern when purchasing a home
Property tax
HOA or condo fee
Homeowner insurance
Energy cost
Water and/or Sewer
Maintenance
Home improvement loan
It is
obvious that every single contributor depends on Where you buy,
What you buy and Who is buying a property (individual ability to
maintain and manage the costs involved).
Bear in mind, that a standard real estate analysis used by the banks
and other financial institutions for official presentations may
not consider all the parameters, which you will be needed for comprehensive
analysis of your immediate costs and for projecting the balances
into a long-term prospective.
Let us also take a brief look at some additional aspects of a household
budget management, which can be definitely incorporated into a real
estate analysis while searching for a property.
The cost of using your household vehicles for commute is always
bringing a significant burden to your budget and greatly depends
on the location of the property.
Beside transportation costs the property whereabouts may trigger
some additional expenses related to the specifics of the location,
for example:
Choosing a private school for children
instead of public
Extra spending for leisure activities specific to location
Food and services costs
Health and/or other Insurance policies rates
d.
Mortgage payment strategy
Another extremely important aspect of
money management while dealing with a real estate property is the
mortgage payment strategy. Invoking an accelerated mortgage payment
method can substantially decrease the amount of mortgage interest
to be paid off. Making some amount of extra mortgage payment on
a regular basis will certainly rearrange the investment pattern
and impact the accumulation of saving amount and investment funds
on a long run.
Moreover, the outcome produced by mortgage payment, investment and
saving strategies is also affected additionally by a number of parameters
such as income tax bracket, investment return rates, interest tax
deduction amounts, inflation rates, personal spending, etc.
All the financial matters just listed above
do certainly bring a significant complexity to a real estate investing
and budget balancing equation, which can not be solved successfully
without a scrupulous data collection and an assistance of a professional
mathematical analysis.
In order to compute a real estate property
related expenses the following real estate software and financial
calculators will be definitely needed for a real estate investor:
To calculate mortgage payments real estate
investor must have a mortgage payment calculator with accelerated
mortgage payment options(when extra mortgage payments are made on
a regular basis). This financial calculator must also enable user
to estimate the total interest amount paid at the end of mortgage
payments, compute the term of accelerated mortgage payments and
demonstrate the correlation between the amount of down payment,
mortgage term, mortgage rate and monthly mortgage payment.
It is also absolutely necessary to
estimate the home value and equity accumulated to the end of each
year of the mortgage payment in order to project a financial balance
for the home owner's household budget. Therefore, the property owner
will be needed a home equity calculator showing an annual equity
amount accumulation based on initial home value and annual home
appreciation rate.
Home energy cost mostly includes the cost
for electricity, natural gas, propane, oil, coal, hardwood, softwood,
wood pellets, which energy is used for heating, air conditioning
and other home appliances. The home owner or investor has to utilize
a home energy consumption calculator, which will enable the user
to find out an average monthly energy bill after considering a list
of home appliances usage along with a seasonal fuel cost.
There are regular home maintenance costs,
which have to take care of costly jobs like painting the house,
putting in a new furnace, replacing the roof and so on. These costs
may run from 1% to 3% of the property’s value or even more
each year. An itemized maintenance and home repair cost calculator
can be utilized for projecting an average monthly amount, which
the property owner would need to reserve in order to afford the
future and current replacement or repair expenses for the subject
property.
Household budget is significantly affected
by transportation expenses, which do greatly depend on the location
of the property. Consideration of commute costs can certainly help
the investor or homeowner to make an appropriate household budget
planning and real estate purchase decision. To find out an average
annual cost of a car the user needs to have the itemized transportation
expenses calculator. This calculator must enable investor to compute
how much per mile does it cost to drive a car and then, calculate
operating cost of all household vehicles together.
Other utilities like loan calculator , water bill calculator, homeowner's
insurance calculator and property tax calculator might be useful
as well.
If you owned a rental investment property, renting out a part of
your residential property or managing houses for rent then you would
need a rental property investment analysis calculator to evaluate
all your rental income matters like cash flow, taxes, capital improvements,
depreciation schedules, returns on investment, etc.
In order to project the household expenses
into the future the investor or property owner will be needed an
inflation calculator, which will help to estimate the future balances
for the property based on the proposed average annual inflation
rate.
If you are saving money then you need investment
calculator in order to estimate your future saving amounts. This
utility should be able to compute the amounts based on deposit frequency,
rate of return, compounding period, term, period raise rate, id
deposits made at the beginning or end of period and investment tax
rate. In a case of a risky investment like stocks consideration
of risk factor must be incorporated into computational process as
well.
Finally, if you are planning retirement or just would like to know
how long your saving amount will last then you need saving and spending
calculator. This utility should be able to calculate the term of
spending after amount of periodic spending, saving rate, investment
tax rate and inflation rate specified.
If you are happened to be that considerate
and responsible real estate investor or home seeker who is searching
for a possibly most comprehensive analytical instrument developed
to project the home carrying costs and balances in advance, then
you definitely should look into a software package named REAnalyt
5.0 . This software package helps home seekers to perform the
most comprehensive financial overview and conduct a long-term cost
analysis of real estate properties while exploring real estate market
and before making a purchase decision based on some non-pragmatic
personal preferences. This software package also enables users to
project the outcome of each prospective purchase on the household
budget while taking into consideration some non-traditional parameters
such as personal saving and spending, mortgage with accelerated
options payments, investment returns, transportation expenses, home
energy cost and more.
REAnalyt 5.0
has been also designed to assist home buyers to project the subject
property carrying costs along with other expenses and then compare
selected properties by their immediate and future financial balances.
This software can be very useful for current homeowners as well
in helping the homeowners to overview their property related expenses,
project the costs into a future and define a right financial management
strategy for a budget. A good number of additional parameters
have been integrated with this program in order to provide a comprehensive
comparing and long-term cost analysis of real estate properties
and enable users to project the overall impact of the costs on
the homeowner's budget.
The featured software package also contains Real
Estate toolbox, which holds such constantly
needed for saving time and money utilities like Rental
income calculator with meticulously itemized
property data form and detailed report on rental property performance
after analysis, Saving
and Spending calculator (great tool for
retirement planning!) with reverse options for finding the right
deposit amount to meet saving goal, Mortgage
and Equity calculator with accelerated
mortgage payment options (outstanding utility for choosing a right
financing and mortgage payment strategy!), Loan
calculator with multiple reverse options,
detail oriented Maintenance,
Energy,
Transportation
cost calculators and other financial calculators.
REAnalyt 5.0
can be at real estate buyer's assistance for a lifetime just for
a fraction of the single hour consulting cost, which the home
buyer would be paying to a certified professional analyst for
finding the best solution out of a complex analytical process
with numerous parameters while selecting a right real estate property
for investment or dwelling.
Special offer:
Home
Investor Super game is now delivered alone with every purchase
of REanalyt group software. This
super game was designed not only to entertain or challenge,
but also assist the game player in developing advanced understanding
of how to make prudent financial decisions when choosing a Real
Estate property and managing personal financial assets after the
home purchase. Read
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