Grow your Profits by Tracking your Dollars and TIME
The numbers don’t lie
You’re reading this so it is an impression that you are interested in making some extra money through real estate investing? It is an absolute great way to have your portfolio diversified and eventually see an increase in your wealth. Before you get started in this real estate venture, it is advisable that you do your research and understand the factors that you will have to encounter to achieve success in the real estate industry. You might want to check out our blog about Creating a Real Estate Business Plan as well.
Real Estate Numbers and how it is important
We will say often to our clients, “The Numbers Don’t Lie”. In choosing a property that you are about to purchase, you would want to make sure that it would yield to a healthy balance between income and expenses, thus providing you with a positive cash flow. You want to make sure you're buying a property that has a healthy balance between income and expenses, providing a positive cash flow. A simple way of determining how healthy your potential property investment is, you will need to calculate these numbers by yourself.
The important numbers to track here are the purchase price, down payment, monthly mortgage payment, property taxes, insurance, and any necessary repairs or renovations. In addition to this, you might also want to keep in mind that some properties in some areas have special district taxes and sewer tax, which is in addition to your property taxes. Other items are predictable, such as your typical taxes and insurance. you can get this information accurately and some will be an educated guess. These things are a little bit complex and we know it could be a little challenging, so we at Unbundled Property Management are willing to help you in calculating your numbers through our real estate calculator to estimate the potential return on investment (ROI) of your property.
If repairs are needed that you are not familiar with, do not guess! Speak with someone that has experience and get a professional quote.
Value of Time in Real Estate Investing
The most valuable resource that needs to be taken into account in making property investment decisions is time Of course, since time is our most valuable resource, you might want to evaluate your options and make informed decisions about where to invest your time and money in. If you have a demanding full time career you may want to focus on investment properties that don’t need a lot of renovations. The measurement that needs to be taken into consideration is the exchange of time for money. Too often folks underestimate the amount of time some of these projects will take and get caught up in the “return”. The “return” must be measured including time as well as dollars. Also keeping in mind, we only have so much time – 24 hours per day to be exact!
When measuring your estimated time needed for property management tasks you will want to include collecting rent, maintenance requests, scheduling vendors, general preventative annual maintenance, and resident move in and move outs. It is important to consider the cost of a property management company as well as the time and effort required to manage the property on your own. This has the potential to have a significant impact on the overall return on investment. Having a Property Management Company who does a high quality job and great service that offers these important matters for a more affordable price point for fees is a huge help to improve your numbers.
Unbundled Property Management Spotlight!
Something we believe strongly in at Unbundled is taking the time to evaluate properties in advance and educating our clients throughout the process. We want to help them see things in advance so we can help them make sound investment decisions that will increase their future returns. We trust with an initial investment of more time up front, in learning and educating this will lead to quicker, more confident decisions in the future. It is also necessary to consider the amount of time required for property management as well as the potential rental income that the property can generate. The work is not over when a resident moves in and this exchange for your time needs to be calculated into your return analysis.
Summarizing
The numbers are everything in real estate investing. Understanding a property's numbers allows you to make more informed decisions and increase your potential return on investment. Every number matters, from the purchase price and down payment to monthly mortgage payments and property taxes, all the way through the amount of hours you need to put into each phase of the project. Numbers don't lie, so do your research and take the time to weigh all of the numbers before making a decision.
So, are you ready to begin your journey into the world of real estate investing? Remember that knowledge is power when it comes to numbers. You can maximize your profits by being intentional about keeping track of both your time and dollars. Underwrite your deals honestly and accurately. Track your time like it’s your dollars, every minute you spend in one place is an opportunity lost in every other. Roll up your sleeves and let's get started! Happy Investing!
