Michigan Real Estate

Lighting is an often overlooked way of bringing more elegance and pizzazz to your event. Your special event can become more memorable and unique by having wall and/or ceiling lighting. Dancing on clouds and having stars on the ceiling during your dances make the moment even more special. When your guests see the awesome dance floor lighting they will not be able to wait until they can dance along with the lights. Your name, initials, or a customized design can also be shined onto the walls as a monogram.

Michigan Wedding Uplighting

Planning out the right lighting for your event is not an easy task though, that is where your lighting vendor comes in. Your vendors experience will help you to decide which aspects of lighting are best for you. There are multiple things to keep in mind when picking your lighting packages, for example the size of your venue and your budget. Shining the right lighting can make everything look better. The phase looking through rose colored glasses comes from this point. Your guests, decorations, cake and flowers will all benefit from having the right lighting in your room.

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The most anticipated period of any event with a Michigan DJ or live band is the dancing. Properly lighting your dance floor further encourages your guests to make the full use of your dance floor. Your guests will feel like they are at the hippest dance club with the lights which enhance the mood. The lighting affect can be changed with the mood and beat of your song. This brings you and your guests further into the moment and even the worst dancers will enjoy dancing the night away.

Wall washes are another commonly used lighting component. Having a wash of one color on the walls and a different color on the ceiling can perfectly alter the look of your room. Even a tent can greatly benefit from the use of wall and ceiling washes. Theme-oriented patterns or just geometric patterns can also be projected onto the walls. This is the perfect display of a company logo during a company holiday party or get together.

Michigan Event Uplighting

The room should never be too dark, yet nothing is worse than going to an event that uses house lighting on at 100 percent. A room wash solves this dilemma quite easily. The room wash also provides ambiance in your event location. Using a colored wash will give the room a warm glow which will draw in guests of your event and make them feel at ease and comfortable.

Your floral arrangements and centerpieces can also be guaranteed to be noticed by lighting them with a small light (pin spot). Guests with more deliberately see the details of your centerpieces when they are accented with lighting. The colors and elaborateness of the floral arrangements will be marveled at when they are accented with lighting. Your cake features are also enhanced by having the right type of light shining upon it.

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Having a lot of assignments at the time you wanted to have some break at the weekend can surely bring some kind of stress to student since they have to sacrifice their having fun time in order to finish those assignments. It is definitely become kind of problematic if you also a student in your last semester and need to do dissertation. There are many things to consider and also a lot of things to do, but of course the first thing you need is to make the research paper since dissertation is all about research in the form of elaboration and findings of your research.

There are many people having some difficulties in finding topics which are able to become a great start of their research papers. That is why it is important to know that you can easily get some help about finding topics about your dissertation if you look carefully to the internet. There are many web sites which are able to give you professional help about the process of writing research paper. You can find some tips, advices, or even service of writing the paper for you and make you rest assure.

It is actually a shame when you are unable to do the research on your own and decided to use some help from other parties. But in my opinion it is very common to do this when there are already too many stress piled up and also too many things to lose if you unable to get a good score. Not to mention that you are also busy with your job or family matters. So there are nothing wrong with seeking for help to easily finish your research paper and hurry up doing the dissertation to your heart content. Another important thing to remember is that you need to find a good and reliable online writing company to help you.

In earlier days, relocating to different places is a really daunting task. However, with the help internet it is much easier in these internet technology days. Especially, in US, the apartment search guide will help you to resolve your issue. You are able to find different kinds of apartment and amenities from this guide. New York apartments are available in a wide variety of different neighborhoods and surrounding cities. You can easily find pet friendly New York apartments using apartment finder or search for apartment amenities like a fitness center, swimming pool or off-street parking.

When you are trying to start looking for new york city apartments, check this apartment rental guide, which has great advice on finding and renting New York apartments. Also this guide will help you to find Manhattan apartment, long island apartment and queens apartments. This apartment research guide will definitely help you to find affordable Long Island apartments for rent, questions to ask the landlord of your rental apartment, and how to make sure your apartment rental is right for you.

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The New York City consists of five boroughs: Queens, Brooklyn, The Bronx and of course, Manhattan. Each is unique. Each has its own characteristics. Each is special. When you start your search for your New York apartments, you will want to consider proximity to work or school. The transit system is one of the few that runs 24 hours a day, but some commutes can be long. Each area will also offer up various price ranges.

When you are trying to search for Manhattan apartments, it is one of the most expensive cities in the world yet affordable apartments can be found. All of these apartments offer different styles of architecture, lifestyles and their own benefits. Long Island City apartments are available in a wide variety of different neighborhoods and surrounding cities. If you are looking for queens apartments or are even earlier in the process and considering a move for a job, the general rule of thumb for most places is that to apply for a decent apartment, you have to be able to confirm that your annual salary is a minimum of 40x one months rent.

And keep in mind that despite the high prices, the competition to get a place to live is surprisingly high. If you see a place you like that you can afford, grab it immediately. This cannot be emphasized enough. If you wait even a single day, there is a very good chance that it will be gone by the time you get your stuff together to go after it. Finally, there are some well established and experienced websites offers this apartment search guide information to their customers.

When you are trying to start looking for New York apartments, check this apartment rental guide, which has great advice on finding and renting New York city apartments. Also this guide will help you to find Manhattan apartment, long island apartment and Queens apartments.

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1.) What’s Your Type?

There are many different types of commercial properties that you can purchase including:

o Office
o Retail Space
o Warehouse Facility
o Restaurant
o Commercial Condo
o Strip Mall

The first step is clearly defining what type of property you want to purchase and how you want to use it. The following information will help you maximize your investment dollars to get the best possible deal when purchasing your property.

2. Build Equity With Your Investment

Equity is Money

Building equity is the primary if not the ultimate reason to buy instead of rent a commercial property. Let’s face it. It’s money in the bank. In fact, it’s better than money in the bank because you can’t get the same kind of return on your money when it’s sitting in the bank as opposed to when you’re building equity. Moreover, if you choose the right financing for your commercial real estate purchase, you can not only build equity through ownership, but you can also leverage your capital saving in order to grow your business, hire additional employees, or even purchase an additional location when the time comes.

Owning beats renting because you can sell your investment once you outgrow the space or sell the business. Even if commercial property in your area has not appreciated (which is unlikely), you can recoup your investment by renting out the space once you move out and by selling when the time is right.

If you plan on growing into your building, buy something larger than your current needs, and rent out the extra space until you need it for expansion. This will provide you with steady income that you can use to help pay your mortgage or invest in your business.

3. Calculate Your Savings And Your Potential Profit

Lower Monthly Payments

Consider buying commercial real estate as a savings for your business. Real estate costs are the third largest business expense, behind payroll and taxes. Long loan amortizations mean that your monthly payments could wind up being less than what you would pay for rent, since landlords usually charge more than their monthly loan payment. In other words, owning your own commercial property may actually be more affordable, depending on current market conditions.

Ask your lender to provide you with an analysis of the current market in your area so that you can see which scenario is best for you (renting or buying). The lender should be able to explain your options in detail with examples of monthly rental costs vs. monthly loan payments and the benefits of each.

Analyze the Rent Value

Upon finding a property that peaks your interest, find out the status of the current tenants (if it is a multi-tenant property) in terms of how much rent they are paying. Check the current market to see if the rents are undervalued, meaning below what you can get in the current market. Your realtor or lender should be able to help you figure out how much you could charge for rent and determine how much of a profit you can make each month.

Tax Advantages

There are many tax advantages to becoming an owner of a commercial property. In most cases, you can deduct part of the value of the building at tax time, as well as improvements you’ve made as depreciation, which can save you more money on your taxes. Buying the property under your business or corporation’s name is also a better tax strategy than under your personal name.

4. Do Your Research

The more you can learn about property types and options, mortgages, financing, zoning and remodeling; the better position you’ll be in to make wise decisions concerning the acquisition of a commercial property.

However, you don’t have to know everything. That’s where putting together a powerful team of professionals proficient in their areas of expertise may be your most important step. Building a team of advisors – people you can trust to steer you in the right direction is critical to your success.

Understand Current Market Conditions

Keep your eyes open for news articles pertaining to the commercial real estate market. Is it “hot” right now? Is it a buyers’ or sellers’ market? What kinds of interest rates are available?

The Internet is a great place to start. Conducting a Google search for “commercial real estate market,” for instance, will give you results that include news and resources for national trends, analytics and market research.

In addition, many realtors, lenders and lawyers across the country offer free and timely articles on their websites that shed light on current commercial real estate trends nationwide. Again, make sure you listen to both sides of the story.

Tap Expert Resources

National market research companies can give you specific information about the area where you’re preparing to locate your business. You can also find information on demographics including the median age, household income, breakdown of ethnicities, and more from censuses available from the U.S. Census Bureau.

Also contact commercial lenders or realtors for additional resources. In looking for help, it’s usually better to talk to a lender or realtor with nationwide experience and up-to-date information than a small-time operation that might not have recent data for you. If the lender/realtor hasn’t gotten updated demographics since 1996, you’ve essentially wasted your time. Also, a lender or realtor that specializes in the type of property you’re looking for will be more likely to have the specific information you need, which will save you time in research.

Study the Current Vacancy Rate

Research what the vacancy rate has been over the past few years for the area you’re taking into consideration. If there seem to be high levels of vacancies, try to find why. Is it a bad neighborhood? Talk to store owners in the immediate area and find out how long they’ve been doing business there. Ask if they have any concerns that you as a potential property owner should know about the area.

Research Commercial Realtors

It’s important to research commercial realtors that specialize in the type of space you’re looking for. Grill the realtor you are considering selecting on the entire purchase process so you know what to expect. Ask how long the process usually takes so that there are no surprises. Check their references and their track record (more on finding a Commercial Realtor in #5).

Examine Experienced Commercial Lenders

Choosing a lender and financing program is just as important as choosing the property. Again, find out the entire process of financing, as well as your different options. Don’t assume that just because you’ve had a relationship with your bank for years that using their financing is the best choice.

Banks don’t always offer the lowest rate for commercial loans, and sometimes have a far longer turnaround than non-bank lenders. Some banks require that you transfer your accounts to them in order to qualify for a loan. Be aware of any stipulations when seeking a bank for a commercial loan.

5. Choose the Right Commercial Realtor

As mentioned before, you need qualified partners to help you with the process of buying commercial property. Start with a terrific commercial realtor.

Some commercial realtors work exclusively with individuals interested in investment properties. Others work with owners/users of commercial real estate, and among those some specialize in property management, which can be an added value to you.

Who Do You Know?

Referrals from trusted sources are usually the best way to find a good commercial realtor.

Ask Questions

Set up a meeting with more than one potential commercial realtor. Find out as much as you can about their professional background, education, and experience with your type of property. You can ask for a list of recent transactions to give you an idea of what they deal with on a regular basis, and how many properties they’ve actually sold in the last year or two. And most importantly, ask for client references (testimonials)! Real client feedback is the most effective measure for potential success.

The Right Match

Make sure you choose a realtor that understands your specific needs. If you are a small business, you don’t want to work with a realtor that normally handles multi-million dollar deals. Your project may become less of a priority when that particular realtor gets a bigger commission to worry about.

6. Consider Your Time Frame

If the reason you are looking for commercial property is because your lease is ending, think twice before jumping into a decision you might regret. Finding just the right space, securing financing and going through the process of obtaining a commercial property can take months. If you don’t have that kind of time, you may need to rent month-to-month for now.

Take Your Time

While you may be in a hurry to move into a space, take your time. Buying any kind of property is a major decision, and buying commercial property is even more important for the development and growth of your business. Selecting a property in the wrong area, or a space that doesn’t allow you to grow can hinder your company and even cause it to fail, so plan carefully.

If the realtor or lender gives you an estimate of three months from start to close, plan for longer – just in case. Keep in mind there are many people involved in the process of buying property, from the seller, realtor, lender, appraiser, surveyor, paperwork approvers, secretaries, and more and this process can often take slightly longer.

7. Location, Location, Location

One of the most important factors in considering commercial property is location. If a property is located on a busy corner that is difficult to get to, your business may not do well (in fact, that’s probably why the property is for sale). If you want to operate a dog kennel and the property you’re considering is in a residential area, not only will your business disturb the residents, the zoning laws may prevent you from operating there.

Foot Traffic

For a retail business, look for areas with high foot traffic that will give you the exposure and increased walk-ins you need to be successful.

If you are looking for an industrial or manufacturing facility, then you can stay out of the retail limelight and buy something in a warehouse district. These areas are usually cheaper than retail space.

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Easy Access

Make sure your location has easy access from the road. Look to see if the site is at a difficult intersection. Is there construction going on that seems like it won’t be ending any time soon? On the other hand, what’s the potential once the construction is completed?

Check out the Competition

If you want to open a bistro in a neighborhood that has several bistros, you might want to try somewhere else with less competition. However, a healthy population of restaurants usually means a healthy population of customers.

Know Your Customer

Find out the demographics of the area you’re interested in. If you want to move your sports apparel shop to a new location, you’ll probably want an area with a high percentage of youth and active adults. An urban area with a lot of pedestrian traffic might be better for this kind of retail shop than a suburban area in a retirement community.

8. Free Parking

We’ve all spent time driving around and around looking for a parking spot. It can be very frustrating, especially when you’re running late. Whenever possible, you want a location that has ample parking for your visitors.
If you have a retail store, restaurant, or other high-traffic business, estimate how many customers or visitors you’re likely to have at any given time and consider rejecting any properties that have fewer available parking spaces than your estimates. Again, use your best judgment and consult your realtor.

Avoid Headaches

Also pay attention to how your parking is situated. If it’s located just off a major road, it may provide a headache for people trying to back out of the parking space, and may even cause accidents. When visiting the property, see how well you can maneuver the parking. If it’s a hassle for you, it will be doubly so for a potential customer or visitor.

9. Get in the Zone

Before you begin the negotiation process for a commercial property, make sure to investigate the zoning laws, as well as what types of businesses you are able operate there. There are zoning laws about the type of business that can be conducted in certain spaces.

For instance, some spaces do not permit food and beverage to be served, or may have restrictions on how late a business can operate. The typical zoning districts in most cities include: residential, commercial, industrial and mixed-use.

Don’t Assume

Zoning can be tricky, so do your due diligence on this topic. Don’t assume that just because the previous tenant of the space had a restaurant that the property you’re looking at is necessarily zoned for food and beverage. Many businesses slide under the radar for months or years while violating zoning laws. Making assumptions can cost you big time and big money when it comes to zoning.

Regulations

Zoning laws can regulate not only the type of business that can operate, but also parking, signs, water and air quality, waste management, noise, appearance of building and more. Find out any and all regulations regarding the property in advance.

Visit your local library or zoning office to get information on all the zoning laws, rules and regulations that apply to the property you’re considering for purchase. Talk to people at the zoning office if you have concerns or questions prior to making the investment. Ask your realtor to double-check your efforts to ensure you’ve covered all your bases.

10. Inspection

Normally, if you are considering buying a home, you have an inspector look at the structure, pipes, electrical system, etc. A commercial property requires even more of a stringent inspection, not only to meet your needs, but also the requirements of the local government.

Before purchasing commercial property, hire professionals to thoroughly examine the electrical system, including the sprinkler and security system, as well as the plumbing, phone, and Internet systems. Since you will have already done your homework on zoning and regulations, you will be aware of the building codes. With the results from your various inspections you can get an estimate of how much work, if any, will need to be invested in order to get the building “up to code.”

A Good Foundation

Hire an architect or engineer to examine the foundation and structure, especially if you have frequent natural disasters such as earthquakes or hurricanes in your area of the country.

Communication

If you are looking at an older building, there may be quite an investment up front to either meet city standards or meet your own standards. Don’t overlook the importance of a high-tech phone and Internet system, especially if you have a lot of employees. If there is not already a T1 or fiber optic network in place, build this cost into your purchase, as it will save you money and headaches in the long term over more traditional (and older) phone and Internet systems.

Make sure to hire an expert to tell you if the changes you need are possible and within your budget. With most commercial real estate loans, you can include these remodeling costs in your financing. Again, make sure to ask.

11. Map Out Your Plan

As a business owner, you understand the importance of carefully planning every move. Buying a property requires no less preparation. Before you begin looking for a building, sit down with your finances and figure out how much of a mortgage you can afford to take on.

Create a Budget

When calculating your budget for buying property, don’t leave out taxes, insurance premiums, and repair and maintenance, as well as costs involved in customizing the space to meet your needs. Failing to create a budget for these often overlooked expenses will quickly put you in the hole with your new property. If you need help creating this budget, ask your realtor or your commercial lender for advice.

Room to Grow

To determine the amount of mortgage you can afford, assess your income and expenses. Your mortgage and property expenses should leave you enough room to operate your business without cutting into your normal expenses.

Sometimes it is necessary to take a cut in profit in order to purchase the kind of space you need to grow. Think of it this way: buying a larger space will allow your company to stretch its wings, which will result in more profits down the road. It’s a risk you sometimes need to be willing to take if you want to grow. Remember, if you buy more space than your company needs immediately, you can acquire tenants who will provide rental income that can significantly offset your monthly mortgage obligation.

Planning Ahead

It’s almost always a good idea to buy slightly more room than you currently need. You can lease out the additional space until you need it. If this is your plan, map out how this will bring in income to help subsidize your mortgage. Remember, however, that you may have periods when some of the space is unoccupied, so don’t rely on the rent coming in to cover your mortgage every time. Make sure you can cover the mortgage on your own.

Have an Exit Strategy

So, how does it all end? Hopefully with big dollar signs. After all, that’s why you’re investing, isn’t it? To eventually cash in on your investment. Therefore, you need to have an exit strategy.

You might choose to hold onto your commercial property through retirement, as real estate is a great asset that can provide you with a steady passive income stream: a lucrative retirement strategy.

12. Before You Sign on the Dotted Line

Having a carefully drafted contract is key in your commercial real estate deal. You are required by law to have a written sales contract, and it is to your advantage to have one with each detail of the transaction documented.

Also, make sure to leave ample time for due diligence and closing, especially if any construction is involved!

Details

Despite the stories of real estate contracts being thicker than phone books, all you really need is a contract that lays out the important elements of your agreements. First, it needs to describe the property and the purchase price, as well as whether the price is due at closing or in installments.

Equipment, etc.

The contract should include any equipment, machinery, or personal property that is included in the purchase price. It should list any contingencies that must be met prior to completing the purchase. A common example of a contingency is whether you are able to obtain a loan to finance the purchase.

Don’t Forget…

The contract should cover how the property taxes and utility bills will be pro-rated between you and the seller, as well as what type of title insurance you must provide. The date for closing and delivery of possession should be in the document, as well as what legal recourse either the buyer or seller has in the event that the other party defaults on the agreement.

And Always…

Once the contract has been drafted, have a lawyer review it prior to signing it. A lawyer may be able to help you negotiate a better deal than what is originally presented.

Unfortunately, not all property sellers are honest, and some will try to hide their true purpose in technical legalese within a contract. Having a trusted lawyer and commercial realtor review your contract will keep you safe in your transaction.

13. Choose a Lender with Care

There are many types of lenders available to assist you with your commercial real estate financing. But keep in mind: not all are created equal. Do your homework in finding a lender that meets your specific needs.

It’s important to find a firm that can give you broad access to capital, understand your priorities, offer you the best deal on your loan and complete the process in a timely manner.

Types of Lenders

There are three basic categories of lenders: direct lenders, indirect lenders and hybrid lenders. Direct lenders lend their own funds. Some examples of direct lenders include commercial real estate lending institutions, banks, and private lenders. Indirect lenders place funds on behalf of others, and include mortgage brokers and mortgage bankers, as well as financial intermediaries. Hybrid lenders both lend their own funds and lend on behalf of others, and include certain investment banks, investment advisors and credit companies.

Banks usually generalize in services, and offer a wide array of products. While this may sound good, think about it for a moment. Would you rather have a lender that knows a little about many financing options, or a lot about three or four products designed specifically for you?

Lending institutions are more specific in nature, and are experts in the products they offer. Banks are more traditional in their financing products, while lending institutions are more entrepreneurial and creative.

Banks often require that you move all of your financial relationships under their umbrella, including deposits, LOCs, etc., while non-bank lenders only work with your real estate loan.

The U.S. Small Business Administration (SBA) is a great resource for small companies looking to expand their business or purchase real estate for commercial use. The SBA offers tools that can help you plan your next move, as well as loan programs for a variety of business purposes. The SBA itself does not offer loans, but works through banks and non-bank lenders to provide small businesses with loan programs that meet their needs.

Get Started Early

It is important to choose your lender early in the process so that you can maximize leverage and get a lower cost of funds. Your lender will ask for certain forms in order to determine your eligibility for financing, as well as to figure out what kind of deal you can negotiate.

You will need to provide your income and expense statement, balance sheet and personal financial statements from all prospective owners of the property. If you don’t have them written already, you will need to create profiles of the management team, including information on education and employment background, as well as experience relevant to your business. Other documents needed include a property appraisal, contract of sale, and plans for the use of the property. Providing these documents early can help streamline the process. Again, your realtor and lender will help you through the process.

14. Know Your Financing Options

While you are in the “shopping” phase of looking for a commercial property to purchase, you should begin to research your financing options. There are many kinds of commercial financing options available, so it is important that you find the one that best suits your needs. It’s also very important to know how much you’re qualified to borrow. This will help you and your real estate broker find the right type of property for you faster.

No matter what type of loan you wind up getting, negotiating the loan will be based on the same basic factors: anticipated use of the property, expected returns from the property or business conducted there, geography, type and size of real estate, perceived risk to lender and market conditions. There is no one rate applicable to all commercial financing. The rate you receive will be based on your specific situation.

If interest rates are low, securing a low fixed rate will mean you pay less interest over the entire mortgage. A variable rate, which is considered by some to be more risky, can give you a lower payment for a period (before it increases), which will let you use the money saved for other investments.

In weighing your financing choices, remember that some debt is good. Don’t assume you should take the loan with the highest down payment requirement so you can “pay off your debt faster”. Putting down more money means you have less to invest in your business.

Term Loans

Based on how much money you need to borrow, there are different financing options available. One option is a term loan. Term loans can be used for a variety of purposes, including financing permanent working capital, new equipment, refinancing, expansion, acquisitions and, of course, buildings.

There are loans specifically designed for commercial real estate or equipment. Banks typically lend up to 80% of the value of the real estate to be financed, and the loans must be repaid in 15 to 20 years. If you are able to come up with the remaining 20% on the cost of the property (and don’t have anywhere better to invest the money), this is an option to consider.

Up Up and Away

Beware of balloon payments. While paying a very low monthly amount at the start sounds great, you often end up spending additional money to refinance your commercial mortgage as lenders reset interest rates or reexamine you and your business over the life of the loan.

Credit Line

If you want a more flexible loan, you may have the option of a credit line that can provide you with cash on an as-needed basis, up to a cap amount. Credit lines almost always have a variable rate, and have interest-only payments for the first one to three years.

Equity Financing/Joint Ventures

Equity financing involves joint ventures with investors that have the capital you need. Usually, the investor will receive a percentage of your business’ profit in exchange for the capital you need to purchase the building or stock in the company if it is public.

Some investors will take a back seat to your executive decisions, while others will want a say in the operation of your company. Joint ventures are not for everyone, so keep in mind all of these factors when considering one.

The SBA 7(a) Loan Program

The SBA has a variety of financing products that are ideal for small businesses. The most commonly used SBA loan is the 7(a) Loan Program. The loan is provided through banks or non-bank lending institutions.

In order to be eligible for a 7(a) loan, your business must be for profit, and you cannot purchase real estate for investment purposes. There are many other guidelines to qualify for a 7(a) loan. The maximum amount a business can borrow from a 7(a) loan is million. Furthermore, all SBA 7(a) loans have prime-based floating interest rates. This type of interest rate structure can leave you vulnerable to monthly/quarterly interest rate swings that can have a significant impact on your monthly mortgage payment.

Now you can see why it is so important to find a commercial lender who can help you digest all of this information and take the time to explain your options.

15. The Best Kept Financing Secret

One of the main reasons small businesses choose to rent instead of purchase their own commercial real estate property is the perception that they can’t afford the down payment. Many of them are not aware that SBA-guaranteed loans are available to qualifying applicants and can provide up to 90 percent loan to cost financing.

In fact, the 504 loan program was designed to assist small businesses in building or purchasing properties while spurring business growth in the local economy.

Only 10% Down

While in some parts of the country, use of the 504 loan program is widespread, there are other areas, such as those east of the Rocky Mountains, where this program isn’t getting the attention it deserves. If you are unable to put down much of the loan cost, the 504 is worth looking at: it only requires 10% – and there are no closing costs in addition to the 10% down! (Please note that there are certain basic criteria you will need to have to qualify for the 10% down program. A good lender work with you to do his or her best to help you qualify for this benefit.)

The other 90% of the financing comes from two places: up to 50% of the total cost (land, building, renovations, and soft costs) is paid for by a senior lien from a private-sector lender, and up to 40% comes from a junior lien from a Certified Development Company (this portion is backed by a 100 percent SBA-guaranteed debenture).

Smaller Payments

Since most banks and loan programs require a minimum of 20-30% of the property cost, and do not fold in soft costs and closing fees, 504 loans are a great way to get the best of everything: by paying only 10% down, you retain more capital and are able to make smaller payments over the life of your mortgage.

Because you have two separate loans with the 504, you end up getting a blended rate that is below market. The first loan is either fixed or variable, and is at or slightly higher than conventional financing rates. The second mortgage (the 40% loan) is considerably lower than market interest rates, and is fixed for the life of the loan. Having a lower interest rate lets your company retain more capital.

504 loans can close in 30 days or less, saving you time, and helping you get into your new property sooner. Another advantage is that there are usually fewer “hoops” to jump through to get approved, as long as you are dealing with a lender who specializes in this type of loan as opposed to one who might process one or two a year. The specialist knows this loan inside and out and can streamline the process, as well as make sure you are receiving all the benefits.

Now Pay Close Attention –

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Ken DeLeon of Keller Williams Realty, Inc.was named one ofAmerica’s top real estate professionals by The Wall Street Journal and REAL Trends.  For the second year in a row, he has been a member of the top 100 real estate professionals by sales volume, which is a component of the “Top 400 Real Estate Professionals,” a prestigious national awards ranking sponsored annually by the two respected publications.  DeLeon is now ranked #45 out of the more than 1.1 million REALTORS® nationwide.

The Top 400 Real Estate Professionals was announced this month with four separate categories honoring the top 100 residential agents and agent teams for excellence in:

Individual Sales Professionals – Sales volume
Individual Sales Professionals – Transaction sides (in each real estate transaction, there are two sides that can be represented by a real estate agent: a buyer’s and a seller’s.)
Team Professionals – Sales Volume
Team Professionals – Transaction sides

According to the top 100 by sales volume list, DeLeon’s 2009 individual sales totaled ,255,170, which earned him his top 50 designation. 

“The best individual agents and teams – including DeLeon’s award-winning efforts – were nothing short of phenomenal considering the challenging real estate market,” said Steve Murray, founder of Denver-based publishing and communications company REAL Trends, which compiled the list.  “Ironically, if you look at the top 100 in each category you will find that collectively, their sales volume and transaction sides held up quite nicely compared with the market as a whole.”

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“Becoming a member of such an elite group as the Top 400 Real Estate Professionals is an incredible accomplishment in any market, but what DeLeon did during these challenging times is impressive on so many levels,” said Marti Gallardo, vice president of classified advertising for The Wall Street Journal.  “His efforts topped 99.99 percent of the more than 1.1 million REALTORS nationwide.”

“I am absolutely thrilled to be named on this distinguished list again this year, especially to be among the top 50 realtors in the country,” said DeLeon who serves clients primarily in Northern California.  “Even with the market’s challenges, it’s incredibly gratifying to help clients find their dream homes as well as help them sell their properties quickly and for the highest price possible.”

The full list of the Top 400 Real Estate Professionals can be found at: www.wsjtop400agents.com

About Ken DeLeon:

Ken DeLeon began his successful career in residential real estate after leaving the practice of law in 2002.  This Palo Alto, Calif., resident is the #1 Keller Williams realtor nationwide, year-to-date (out of over 78,000 agents) and is also the recipient of the Keller Williams Triple Platinum Medallion Award.  He has recently beaten cancer and is a survivor of a 1998 drugged-driver accident. DeLeon seeks to inspire others by speaking frequently to businesses and schools about his experiences and how to come through difficult times with a positive outlook.  For more information about Ken DeLeon, please call 650-454-8526 or visit www.kendeleon.com.

About The Top 400 Real Estate Professionals:

The Top 400 Real Estate Professionals awards program was developed jointly by The Wall Street Journal’s Business Development Group and REAL Trends, a leading source of analysis and information for the residential real estate brokerage industry.  The Real Estate Top 400 honors America’s elite real estate agents and their companies and is compiled and analyzed by REAL Trends. 

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Real estate investing mainly has its aim on making profit and this is done by doing differing methods such as owning, selling, renting, and managing real estate. One investor has circumstances that are differing from the additional investors so the methods can vary.

Real estate is defined as an equity of acreage with the buildings and additional assets that come with it. Real estate investment is considered to be a stable ink=”windo because the property that is involved with it inevitably appreciates in value economically. A real estate investment would not make a stable investment if the property is not well maintained though.

One of the challenges that real estate investing poses is that assets are not easily liquidated. This means that real estate investors need to develop in themselves a more discerning and perceptive attitude in deciding about their investments. However, a good investment guarantees a monthly income that is stable. This is why it is important to know and learn about differing effective strategies in real estate financing.

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Success in real estate investing is not guaranteed with enough capital but with the intelligence that real estate investors possess in considering and weighing things down when it comes to investments. Knowledge of where to find available investments that will make a good real estate investment is one of the competences a real estate should have. A real estate investor who has various options of where to invest would clearly make him have an advantage over the additional investors.

There are various risks and profits that need to be considered in real estate financing so it is also important for a real estate investor to be able to weigh the diverse factors involved and the aftermaths of the investment that is to be made.

Different risks come with real estate financing. A real estate investor needs to be sure about several things first before deciding to invest. The own:inheritf the real estate needs to be verified with a credible title to avoid fake investments. A realty should have also been maintained regularly and have been fully inspected considering the physical structure and environment contamination before deciding to purchase it. The strategic location of the equity also needs to be considered with future uses in mind. An investor does need to be careful in considering if the cash flow that the property can produce will be able to sustain its necessary maintenance and expenses.

A real estate investor can decide to do it alone or in partnership with someone who has more experience in real estate financing. A novice in real estate investing would do better if investment is done with the help of an experienced real estate investor. Additional means may also be used to learn about real estate investing such as relevant seminars or reading materials. Real estate investing is not easy but a real estate investment done properly makes a stable source of profit.

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If you are new to real estate investing or are interested in getting started I wanted to provide you with a Flipping Houses 101 guide.  The rest of this site will provide a ton of material for more intricate strategies and suggestions, but let’s start with a real hard look at the realities of real estate investing.  As an experienced investor my personal perspective is that the market is pretty saturated with real estate investors. There are always deals to be found, but with so much competition, there are frequently too many people willing to pay too much for properties. A lot of investor newbies tend to underestimate costs and pay way too much for a property, get burned, and eventually drop out of the business. The next month ushers in a new crop of hopefuls to take their place.  Pay attention in Flipping Houses 101 to make sure your not one of those that burns out or gets burned.

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Flipping Houses 101 | Get Educated Correctly

Real Estate books and tapes making investing sound easy and TV shows like “Flip That House” only further fuel that fire. My biggest pet peeve is with “Flip That House,” because they tend show an inaccurate profit made on every deal, and they purposely don’t include closing costs, carry costs, or cost of sales (which can easily add up to 15% of the finished product) in the profit calculation. I can prove that several of the featured deals they illustrated as profitable actually LOST money.

Flipping Houses 101 | Networking

One of the best ways to become a successful investor and ‘flipper’ is through networking and partnering. If you are serious about investing, find some smart, experienced, hard-working people with resources that have been investing for a while and work with them. At least half of the many projects I’m funding these days, came to me from another investor looking for an experienced partner.

Flipping Houses 101 | Final Note

Before you run out and buy a hammer and a ladder and plunge into your first flipping project, you will want to do your due diligence and understand the house-flipping process from beginning to end. Only then can you decide if flipping houses is the best kind of real estate investment project for you. That’s it for Flipping Houses 101 if flipping houses is your strategy then start taking action now!

 

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Building financial models is an art. The only way to improve your craft is to build a variety of financial models across a number of industries. Let’s try a model for an investment that is not beyond the reach of most individuals — an investment property.

 

You can follow along by downloading the investment property model.

Before we jump into building a financial model, we should ask ourselves what drives the business that we are exploring. The answer will have significant implications for how we construct the model.

 

For example, a financial institution such as a bank is driven by its assets (investments, loans, mortgages, etc.), therefore we would probably be better off forecasting the growth of the company’s balance sheet. A retail store, on the other hand, is driven by the sales of its products. Therefore, we should focus on forecasting revenues and the income statement.

 

Who Will Use It?

 

Other questions to ask are who will be using this model and what will they be using it for? A company may have a new product for which they need to calculate an optimal price. Or an investor may want to map out a project to see what kind of investment return he or she can expect.

 

Depending on these scenarios, the end result of what the model will calculate may be very different. Unless you know exactly what decision the user of your model needs to make, you may find yourself starting over several times until you find an approach that uses the right inputs to find the appropriate outputs.

 

On to Real Estate

 

In our scenario, we want to find out what kind of financial return we can expect from an investment property given certain information about the investment. This information would include variables such as the purchase price, rate of appreciation, the price at which we can rent it out, the financing terms available fore the property, etc.

 

Our return on this investment will be driven by two primary factors: our rental income and the appreciation of the property value. Therefore, we should begin by forecasting rental income and the appreciation of the property in consideration.

 

Once we have built out that portion of the model, we can use the information we have calculated to figure out how we will finance the purchase of the property and what financial expenses we can expect to incur as a result.

 

The next section we can tackle is forecasting the property management expenses. We will need to use the property value that we forecasted in order to be able to calculate property taxes, so it is important that we build the model in a certain order.

 

Once we have these projections in place, we can begin to piece together the income statement and the balance sheet. As we put these in place, we may spot items that we haven’t yet calculated and we may have to go back and add them in the appropriate places.

 

Finally, we can use these financials to project the cash flow to the investor and calculate our return on investment.

 

Laying Out the Model

 

Since we are about to build a somewhat complicated model, we should think about how we want to lay it out so we keep our workspace clean. In Excel, one of the best ways to organize financial models is to separate certain sections of the model on different worksheets.

 

By putting calculations and projections that are closely related in the same worksheet and separating other calculations that are more relevant to other sections of the model on separate tabs (worksheets), we keep our model organized.

 

We can give each tab a name that describes the information contained in it. This way, other users of the model can better understand where data is calculated in the model and how it flows.

 

In our investment property model, let’s use four tabs: property, financing, expenses and financials. Property, financing and expenses will be the tabs on which we input assumption and make projections for our model. The financials tab will be our results page where we will display the output of our model in a way that’s easily understood (in the form of financial statements).

 

Forecasting Revenues

 

First Things first, let’s start with the property tab by renaming the tab “Property” and adding this title in cell A1 of the worksheet. By taking care of some of these formatting issuing on the front end, we’ll have an easier time keeping the model clean.

 

Next, let’s set up our assumptions box. A few rows below the title, type “Assumptions” and make a vertical list of the following inputs:

 

Purchase Price

Initial Monthly Rent

Occupancy Rate

Annual Appreciation

Annual Rent Increase

Broker Fee

Investment Period

 

In the cells to the right of each input label, we’ll set up an input field by adding a realistic placeholder for each value. We will format each of these values to be blue in color. This is a common modeling convention to indicate that these are input values. This formatting will make it easier for us and others to understand how the model flows. Here are some corresponding values to start with:

 

0,000.00

,550.00

95.00%

3.50%

1.00%

6.00%

4 years

 

The purchase price will be the price we expect to pay for a particular property. The initial monthly rent will be the price for which we expect to rent out the property. The occupancy rate will measure how well we keep the property rented out (95% occupancy will mean that there will only be about 18 days that the property will go un-rented between tenants each year).

 

Annual appreciation will determine the rate that the value of our property increases (or decreases) each year. Annual rent increase will determine how much we will increase the rent each year. The broker fee measures what percentage of the sale price of the property we will have to pay a broker when we sell the property.

 

The investment period is how long we will hold the property for before we sell it. Now that we have a good set of property assumptions down, we can begin to make calculations based on these assumptions.

 

A Note on Time Periods

 

There are many ways to begin forecasting out values across time. You could project financials monthly, quarterly, annually or some combination of the three. For most models, you should consider forecasting the financials monthly during the first couple years.

 

By doing so, you allow users of the model to see some of the cyclicality of the business (if there is any). It also allows you to spot certain problems with the business model that may not show up in annual projections (such as cash balance deficiencies). After the first couple of years, you can then forecast the financials on an annual basis.

 

For our purposes, annual projections will cut down on the complexity of the model. One side effect of this choice is that when we begin amortizing mortgages later, we will wind up incurring more interest expense than we would if we were making monthly principal payments (which is what happens in reality).

 

Another modeling choice you may want to consider is whether to use actual date headings for your projection columns (12/31/2010, 12/31/2011, …). Doing so can help with performing more complex function later, but again, for our purposes, we will simply use 1, 2, 3, etc. to measure out our years. In Excel, we can play with the formatting of these numbers a bit to read:

 

Year 1  Year 2  Year 3  Year 4 …

 

These numbers should be entered below our assumptions box with the first year starting in at least column B. We will carry these values out to year ten. Projections made beyond ten years do not have much credibility so most financial models do not exceed ten years.

 

On to the Projections

 

Now that we have set up our time labels on the “Property” worksheet, we are ready to begin our projections. Here are the initial values we want to project for the next ten years in our model:

 

Property Value

Annual Rent

Property Sale

Broker Fee

Mortgage Bal.

Equity Line Bal.

Net Proceeds

Owned Property Value

 

Add these line items in column A just below and to the left of where we added the year labels.

 

The property value line will simply project the value of the property over time. The value in year one will be equal to our purchase price assumption and the formula for it will simply reference that assumption. The formula for each year to the right of the first year will be as follows:

 

=B14*(1+$ B)

 

Where B14 is the cell directly to the left of the year in which we are currently calculating the property value and $ B is an absolute reference to our “Annual Appreciation” assumption. This formula can be dragged across the row to calculate the remaining years for the property value.

 

The annual rent line will calculate the annual rental income from the property each year. The formula for the first year appears as follows:

 

=IF(B12>=$ B,0,B5*12*$ B)

 

B12 should be the “1″ in the year labels we created. $ B should be an absolute reference to our investment period assumption (the data in our assumption cell should be an integer even if it is formatted to read “years,” otherwise the formula will not work). B5 should be a reference to our monthly rent assumption, and $ B should be an absolute reference to the occupancy rate.

 

What this function says is that if our investment period is less than the year in which this value is to be calculated, then the result must be zero (we will no longer own the property after it is sold, so we can’t collect rent). Otherwise, the formula will calculate the annual rent, which is the monthly rent multiplied by twelve and then multiplied by the occupancy rate.

 

For subsequent years, the formula will look similar to:

 

=IF(C12>=$ B,0,B16*(1+$ B))

 

Again, if the investment period is less than the year in which this value is to be calculated, then the result will be zero. Otherwise we simply take the value of last years rental income and increase it by our annual rent increase assumption in cell $ B.

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Time to Exit

 

Now that we have forecasted property values and rental income, we can now forecast the proceeds from the eventual sale of the property. In order to calculate the net proceeds from the sale of our property, we will need to forecast the values mentioned above: property sale price, broker fee, mortgage balance and equity line balance.

 

The formula for forecasting the sale price is as follows:

 

=IF(B12=$ B,B14,0)

 

This formula states that if the current year (B12) is equal to our investment period ($ B) then our sale price will be equal to our projected property value in that particular year (B14). Otherwise, if the year is not the year we’re planning to sell the property, then there is no sale and the sale price is zero.

 

The formula to calculate broker fees takes a similar approach:

 

=IF(B18=0,0,B18*$ B)

 

This formula states that if the sale price for a particular year (B18) is equal to zero, then broker fees are zero. If there’s no sale, there’s no broker fees. If there is a sale then broker fees are equal to the sale price (B18) multiplied by our assumption for broker fees ($ B).

 

Our mortgage balance and our equity line balance we will calculate on the next worksheet, so for now we will leave two blank lines as placeholders for these values. Our net proceeds from the property sale will simply be the sale price less broker fees less the mortgage balance, less the home equity line balance.

 

Let’s add one more line called “Owned Property Value.” This line will show the value of the property we own, so it will reflect a value of zero once we have sold it. The formula will simply be:

 

=IF(B12>=$ B,0,B14)

 

B12 refers to the current year in our year label row. $ B refers to our investment period assumption, and B14 refers to the current years value in the property value line we calculated. All this line does is represent our property value line, but it will show zero for the property value after we sell the property.

 

On to the Financing

 

Now let’s model how we will finance the property acquisition. Let’s name a new tab “Financing” and add the title “Financing” at the top of the worksheet. The first thing we need to know is how much we need to finance.

 

To start, let’s type “Purchase Price” a few lines below the title. To the right of this cell make a reference to our purchase price assumption from the “Property” tab (=Property!B4). We will format the text of this cell to be green because we are linking to information on a different worksheet. Formatting text in green is a common financial modeling convention to help keep track of where information is flowing from.

 

Below this line, let’s type “Working Capital.” To the right of this cell, let’s enter an assumption of  ,000.00 (formatted in blue text to indicate an input). Our working capital assumption represents additional capital we think we’ll need in order to cover the day-to-day management of the investment property. We may have certain expenses that aren’t fully covered by our rental income and our working capital will help make sure we don’t run into cash flow problems.

 

Below the working capital line, let’s type “Total Capital Needed” and to the right of this cell sum the values of our purchase price and working capital assumption. This sum will be the total amount of capital we will need to raise.

 

Capital Sources

 

A couple lines below our “Total Capital Needed,” let’s create a capital sources box. This box will have six columns with the headings: source, amount, % purchase price, rate, term and annual payment. Two typical sources of capital for acquiring a property are a mortgage and an equity line of credit (or loan). Our final source of capital (for this model anyway) will be our own cash or equity.

 

In the sources column, let’s add “First Mortgage,” “Equity Line of Credit,” and “Equity” in the three cells below our sources heading. For a typical mortgage, a bank will usually lend up to 80% of the value of the property on a first mortgage, so let’s enter 80% in the line for the first mortgage under the % purchase price heading (again, formatted in blue to indicate an input value).

 

We can now calculate the amount of our first mortgage in the amount column with the following formula:

 

=B5*C11

 

B5 is a reference to our purchase price and C11 is a reference to our % purchase price assumption.

 

In the current market, banks are reluctant to offer equity lines of credit if there is less than 25% equity invested in the property, but let’s pretend that they are willing to lend a bit. Let’s assume that they will lend us another 5% of the property value in the form of an equity line. Enter 5% (in blue) in the equity line of credit line under the % purchase price heading.

 

We can use a similar formula to calculate the equity line amount in the amount column:

 

=B5*C12

 

Now that we have the amount of bank financing available for our purchase, we can calculate how much equity we will need. Under the amount heading in the row for equity, enter the following formula:

 

=B7-B11-B12

 

B7 is our total financing needed. B11 is the financing available from the first mortgage and B12 is the financing available from the equity line of credit. Again, we’re assuming that we’ll have to cough up the cash for anything we cannot finance through the bank.

 

The Cost of Capital

 

Now let’s figure out what this financing is going to cost us. For interests rates, let’s assume 5% on the first mortgage and 7% on the equity line. Enter both of these values in blue in our rate column. For terms, a typical mortgage is 30 years and an equity line might be 10 years. Let’s enter those values in blue under the term heading.

 

The annual payment column will be a calculation of the annual payment we will have to make to fully pay off each loan by the end of its term inclusive of interest. We will use an Excel function to do this:

 

=-PMT(D11,E11,B11,0)

 

The PMT function will give us the value of the fixed payment we will make given a certain rate (D11), a certain number of periods (E11), a present value (B11) and a future value (which we want to be zero in order to fully repay the loan). We can then use the same formula in the cell below to calculate the payment for the equity line.

 

Now we’re ready to map out our projections. Let’s start by copying column headings from the property tab (Year 1, Year 2, etc.) and paste them on the finance tab below our capital sources box. Let’s also pull the owned property value line from the property tab (marking the values in green to show that they come from a different sheet).

 

Now let’s forecast some balances related to our first mortgage. Let’s label this section of the worksheet “First Mortgage” and below it add the following line items in the first column:

 

Beginning Balance

Interest PMT

Principal PMT

Ending Balance

 

Post Sale Balance

 

For year one of our beginning balance, we will just reference our first mortgage amount (=B11).  For years two and later, we will simply reference the previous years ending balance (=B25).

 

To calculate the interest payment for each year, we simply multiply the beginning balance by our assumed interest rate (=B22*$ D). B22 would be the current year’s beginning balance and $ D would be our assumed interest rate.

 

To calculate each year’s principal payment, we simply subtract the current year’s interest payment from our annual payment (=$ F-B23). $ F is the annual payment we calculated before, and B23 is the current year’s interest payment.

 

Our ending balance is simply our beginning balance minus our principal payment (=B22-B24).

 

Finally, our post sale balance is simply our ending balance for each year or zero if we have already sold the property (=IF(B19=0,0,B25)). This line will make it easy for us to represent our debt when we go to construct our balance sheet later on.

 

We now repeat the same lines and calculations for projecting our equity line of credit balances. Once we are done with these two sources, we have completed our financing worksheet.

 

Taking a Step Back

 

We can now drop in our mortgage and equity line balances back on the property tab in order to calculate our net proceeds. For the mortgage balance we use the formula:

 

=IF(B18=0,0,Financing!B22)

 

B18 refers to the current year’s property sale value. If the value is zero, then we want the mortgage balance to be zero, because we are not selling the property in that particular year and don’t need to show a mortgage balance. If the value is not zero, then we want to show the mortgage balance for that particular year which can be found on the financing tab (Financing!B22).

 

We use the same formula for calculating the equity line balance.

 

On to Expenses

 

Let’s label our expenses tab “Expenses” and add the same title to the top of the worksheet. This worksheet will be simple and straightforward. First, let’s create an assumptions table with the following input labels:

 

Tax Rate

Annual Home Repairs

Annual Rental Broker Fees

Other Expenses

Inflation

 

Next to each of these cells, let’s enter the following assumption values in blue:

 

1.10%

0.00

0.00

.00

1.50%

 

Each of these assumptions represents some component of the ongoing costs of managing a property. Below our assumptions box, let’s again paste our year headings from one of our other worksheets (Year 1, Year 2, etc.).

 

Let’s drop in a line that shows our owned property value that we calculated earlier and format these values in green. We will need these values in order to calculate our tax expense, so it’ll be easier to have it on the same worksheet.

 

Below this line, let’s add a few line items that we’ll be forecasting:

 

Home Repairs

Rental Broker Fees

Other Expenses

 

Taxes

 

Our first year of home repairs will simply be equal to our annual assumption (=B5). For subsequent years, though, we will need to check to see if we still own the property. If not, our cost will be zero. If so, we want to grow our home repairs expense by the inflation rate. Here’s what the function for subsequent years should look like:

 

=IF(C=0,0,B15*(1+$ B))

 

In this case, C is the current year’s property value, B15 is the previous year’s home repair expense, and $ B refers to the inflation rate. For rental broker fees and other expenses, we can use the same methodology to forecast these expenses.

 

For taxes, we will need to use a different calculation. Property taxes hinge on the value of the property, which is why we have used a percentage to represent the tax assumption. Our formula to calculate taxes will be as follows:

 

=B13*$ B

 

Since our taxes will be zero when our property value is zero, we can simply multiply our property value (B13) by our assumed tax rate ($ B). And now we have forecasted our expenses.

 

Putting It All Together

 

Now comes the fun part. We need to put all of our projections into presentable financial statements. Since this will be the part of the model that gets passed around, we’ll want to make it especially clean and well formatted.

 

Let’s label the tab “Financials” and enter the same title at the top of the worksheet. A couple lines below, we’ll start our balance sheet by adding a “Balance Sheet” label in the first column. Just below this line, we’ll drop in our standard year headings, only this time we want to include a Year 0 before the Year 1 column.

 

Along the left side of the worksheet just below the year headings, we’ll layout the balance sheet as follows:

 

Cash

Property

 

Total Assets

 

First Mortgage

Equity Line of Credit

Total Debt

 

Paid-In Capital

Retained Earnings

Total Equity

 

Total Liabilities & Equity

 

Check

 

Our cash value in year zero will be equal to the amount of equity we plan to invest, so we will reference our equity value from the finance worksheet (=Financing!B13) and format the value in green.

 

Property, first mortgage, equity line and retained earnings will all be zero in year zero because we haven’t invested anything yet. We can go ahead and add in the formulas for total assets (cash plus property), total debt (first mortgage plus equity line), total equity (paid-in capital plus retained earnings) and total liabilities and equity (total debt plus total equity). These formulas will remain the same for all years of the balance sheet.

 

For the year zero balance for paid-in capital, we’ll use the same formula as cash for year zero (=Financing!B13).

 

Returning to cash, we will use this line as our plug for the balance sheet since cash is the most liquid item on the balance sheet. To make cash a plug, we make cash equal to total liabilities and equity minus property. This should ensure that the balance sheet always balances. We still need to watch to see if our cash is ever negative, which could present a problem.

 

On a balance sheet, property is usually represented at its historical value (our purchase price), so we will use the following formula to show our property value and format it in green:

 

=IF(C5>=Property!$ B,0,Property!$ B)

 

C5 represents the current year. Property!$ B is a reference to our investment period assumption and $ B is a reference to the purchase price. The value of the property will be either zero (after we have sold it) or equal to our purchase price.

 

Our first mortgage and equity line balances we can simply pull from the post sale balance on the finance tab. We format each line in green to show that it is being pulled from another worksheet.

 

Paid-in capital, will be equal to either our original investment (since we won’t be making additional investments) or zero after we have sold the property. The formula is as follows:

 

=IF(C5>=Property!$ B,0,$ B)

 

C5 represents the current year. Property!$ B is a reference to our investment period assumption and $ B is a reference to the year zero value of our paid-in capital.

 

We will have to skip the retained earnings line until after we have projected our income statement as it hinges on net income.

 

The check line is a quick way of telling if your balance sheet is in balance. It is simply equal to total assets minus total liabilities and equity. If the value is not equal to zero, then you know there’s a problem. As an extra bell and whistle, You can use conditional formatting to highlight any problems.

 

Calculating the Bottom Line

 

Below the check line, let’s set up our income statement in the same way we set up our balance sheet — with an “Income Statement” label followed by our year column headings. We will layout our income statement as follows:

 

Rental Income

Proceeds from Sale

Total Revenue

 

Home Repairs

Rental Broker Fees

Other Expenses

Total Operating Expenses

 

Operating Income

 

Interest Expense

Taxes

 

Net Income

 

Rental income, proceeds from sale, home repairs, rental broker fees, other expenses and taxes can simply be pulled from the other worksheets where we have calculated them (and formatted in green of course). Interest expense is simply the sum of the interest payments for both the first mortgage and the equity line on the financing tab.

 

The other line items are simple calculations. Total revenue is the sum of rental income and proceeds from sale. Total operating expenses is the sum of home repairs, rental broker fees and other expenses. Operating income is total revenue minus total operating expenses. Net income is operating income minus interest expense and taxes.

 

Now that we have our net income figure, we can jump back up to our retained earnings line in our balance sheet to finish that up. The formula for retained earnings starting in the first year and going forward should be as follows:

 

=IF(C5>=Property!$ B,0,B17+C43)

 

Again, the IF function looks at the current year (C5) and compares it to our investment period (Property!$ B). If it is greater than or equal to the investment period, then we have closed our our investment and the value is zero. Otherwise, the formula for retained earnings is the previous year’s retained earnings balance (B17) plus the current year’s net income.

 

And Now for Cash Flow

 

To answer our original question of what our return on this particular investment is going to be, we need to project the cash flow to the investor. To do so, let’s create another section below the income statement called “Investment Cash Flow,” which also has our year column headings. We’ll also want to add the following lines:

 

Initial Investment

Net Income

Cash Flow

 

Our initial investment line will only have a value in the first year zero cell, and it will be equal to our paid in capital only negative (=-B16). Our initial cash flow is negative because we make the equity investment to finance the project.

 

The rest of our cash flow comes in the form of net income. Since we have the net proceeds from the sale of the property flowing through net income as well, we can simply set the net income line equal to net income from our income statement. To maximize our potential return, we will assume that net income is paid out each year rather than being retained (this could result in some negative cash balances, but for simplicity’s sake, we’ll make this assumption).

 

Cash flow is simply the sum of the initial investment and net income for each year. The result should be a negative cell followed by some negative or positive net income figures (depending on our model’s assumptions). Now we’re ready to calculate our return.

 

A couple lines below the cash flow line, we’ll label a line “IRR” or internal rate of return. The internal rate of return is basically the discount rate at which your future cash flow is equal to your initial cash outflow. In other words, it’s the discount rate that gives the project a present value of zero. The formula we will enter to the right of this label is as follows:

 

=IF(ISERROR(IRR(B51:L51)),”N/A”,IRR(B51:L51))

 

We’re adding some fancy formatting to the formula to make sure that if the IRR function can’t calculate the return, it shows up as “N/A.” The basic function for IRR will simply reference our cash flow cells (B51:L51).

 

We can now play around with our model inputs to see if our assumptions and our project make sense. If you have data from a similar project, you may want to input those values to see if your model closely follows the actual results of the project. This test will help you determine if your model is working properly.

 

Remember, a model is only as good as the assumptions you put into it, so even with a detailed working model of a project, you will still need to invest a lot of time researching appropriate assumptions.

 

Final Touches

 

Take some time to format your model as best as possible. Set up each page so that it can print properly. Make sure that other users of the model can clearly follow it to see what you have done.

 

This is just one example of a financial model. Other models may be more simple or much more detailed. In order to be a great modeler, you have to practice. Good luck!

 

For an example of an investment property model, visit Finance Ocean. Or got to Finance Ocean to get a business plan template.

 

 

http://www.articlesbase.com/entrepreneurship-articles/financial-modeling-investment-property-model-3920713.html

Montville is a small township in Morris County in New Jersey in the US. It is a small place in that area; small from many perspectives. Population is definitely not that big. That way, the market is not that big either. But yes, there is enough liquidity in the market there to invest in it. People earn handsome amount, and so there is enough to invest. This is one thing that is having some impact over the markets. But, one thing has to be understood quite clearly. It is the fact that there are so many factors that go on determining the face of realty. These factors are just not comprehensible for the ordinary folk. That is the reason you have got to go for the services of a
Montville Realtor.

Though, the name suggests a Montville Realtor would offer the services in Montville only, they generally take the combined area of Montville and Parsippany. These services basically derive their business out of the fact that people over there have substantial investment capabilities and that the place is also a tourist destination.

There are many tourists who prefer to have a permanent abode in the region than to rent a space every season. These things bring about many opportunities for these companies to go on selling a house in Montville. Data sourced from the competent authorities shows that the income of families over there is really impressive. It is not a big deal to understand that it has boosted the fate of the industry over there. If the data compiled by the authorities is to be believed then the median income for a household over there is more than 5,000 and that for a family is more than 5,000. It is not surprising though that both the males and females contribute to this end. This has resulted in significant spare amount that can be invested in real estate.

What this precisely means is that selling a house in Montville is not such a big deal. But one thing is for sure, it is, it takes a rich knowledge and good experience of the trade to cut a good deal. To deal with the competition both Montville realtor and Parsippany realtor provide some additional services apart from the general one.  

Linda Licastro’s re/max home connection is a Montville realtor. It provides a number of services about the real estate requirements in Montville. More than anything else, Re/Max Montville offers the twenty years of experience that in listing and selling houses. What is even better is the fact that companies like these offer end-to-end solution in terms of all the processes involved in searching either a buyer or a seller. You will get the services of a photographer, listing coordinator and closing coordinator in the complete process. All you need to do is to pay them in time and get your job done.

http://www.articlesbase.com/home-business-articles/realty-in-montville-3967521.html

Properties located close to Dubai Metro stations have witnessed a sharp increase in consumer traffic since the transit system opened a year ago.
Daniel Mathew, general manager of Rose Rayhaan by Rotana, a hotel located a few metres from the Dubai Financial Centre Metro station, noted that the Metro has become an attraction for hotel guests.

“The majority of them [the hotel guests] are not UAE residents and they need to use public transportation for their daily activities,” he told Gulf News. “The Metro also takes them directly to the shopping centres, main attractions as well as the airport.”

Indeed, Fouad Sharaf, vice president of Mall of the Emirates – a shopping complex which has a bridge that connects it directly to a Metro station – noted that it receives about ten per cent of its daily visitors through the Metro. He told the newspaper that this amounts to an average of 8,000 visitors on weekdays and 10,000 at weekends.

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Earlier this month, it was revealed that Dubai Metro, which celebrated its one-year anniversary has transported an impressive 30 million people since its launch.

The Dubai Metro turned one on the 9th September! Over the last year, more than 30 million people have hopped on the new network. Numbers for August averaged 3.3 million, marking a huge 183% increase from the 1.8 million passengers recorded in October last year.

Shopping malls close to the stations have also witnessed an increase in customer traffic since the opening of the network. “The impact has been very positive,” said Fouad Sharaf, Vice President, Mall of the Emirates (MoE), who told local newspaper Gulf News, that around 10% of daily visitors to the MoE travel via the Metro. With weekday mall numbers totalling 70,000 to 80,000 visitors a day, rising to 100,000 at the weekends, that amounts to nearly 8,000 to 10,000 Metro commuters on a daily basis.

The Metro has also had a positive influence on the Dubai property market, with some tenants starting to consider the location of the Metro station when looking for a new place to live, as well as attracting foreigners looking for lucrative Dubai property investments. It certainly spells good news for The First Group’s two Hotel Apartment projects in Tecom. With Metro Central occupying prime position right beside the Dubai Internet City Metro stop, and Grand Central just a few minutes away, travel for future residents could not be more convenient!

http://www.articlesbase.com/real-estate-articles/metro-dubai-property-witnesses-sharp-increase-3287165.html