INVESTORS
Property Brokerage
For Sale / For Rent
International Realty
For Sale / For Rent
International Realty
A real estate investor is someone who actively or passively invests in real estate. An active investor may
buy a property, make repairs and/or improvements to the property, and sell it later for a profit.
A passive investor might hire a firm to find and manage an investment property for him. Typically,
investors choose real estate for several reasons: cash flow, appreciation, depreciation, tax benefits and
leverage
A cash flow investor might opt to put 5% or 10% down when acquiring a property. This may allow the
investor to obtain favorable financing terms and a lower mortgage payment. This will often result in
positive monthly cashflow, crudely derived by subtracting the monthly debt service from the monthly rent.
Appreciation occurs over time, generally, though an investor may "force the equity" in a property by
making enhancements to it or the surrounding environment to increase its value. In general, residential
real estate is valued by the "comparable sales" method which estimates the value of property under the
principle of substitution. The method estimates property values by comparing a subject property to
similar properties sold in similar locations within a recent period of time.
Depreciation is one of the many benefits afforded to real estate investors. Though the property is
actually increasing in value, the government allows owners to systematically depreciate the property
over its projected useful life span. Depreciation is an allowable tax deduction. In addition to depreciation,
an investor will usually claim the interest portion of his monthly mortgage payment as a tax deduction.
Leverage is a powerful reason for investing in real estate. If an investor used 100% cash to acquire a
house worth $100,000, and the house increased in value by $5,000 in one year, then the investor made
a return of 5% (assuming no other costs in this case). However, if the investor obtained 95% financing,
only $5,000 cash would be required at the closing table, and a bank or other lender would loan the
remaining $95,000 to acquire the property.
buy a property, make repairs and/or improvements to the property, and sell it later for a profit.
A passive investor might hire a firm to find and manage an investment property for him. Typically,
investors choose real estate for several reasons: cash flow, appreciation, depreciation, tax benefits and
leverage
A cash flow investor might opt to put 5% or 10% down when acquiring a property. This may allow the
investor to obtain favorable financing terms and a lower mortgage payment. This will often result in
positive monthly cashflow, crudely derived by subtracting the monthly debt service from the monthly rent.
Appreciation occurs over time, generally, though an investor may "force the equity" in a property by
making enhancements to it or the surrounding environment to increase its value. In general, residential
real estate is valued by the "comparable sales" method which estimates the value of property under the
principle of substitution. The method estimates property values by comparing a subject property to
similar properties sold in similar locations within a recent period of time.
Depreciation is one of the many benefits afforded to real estate investors. Though the property is
actually increasing in value, the government allows owners to systematically depreciate the property
over its projected useful life span. Depreciation is an allowable tax deduction. In addition to depreciation,
an investor will usually claim the interest portion of his monthly mortgage payment as a tax deduction.
Leverage is a powerful reason for investing in real estate. If an investor used 100% cash to acquire a
house worth $100,000, and the house increased in value by $5,000 in one year, then the investor made
a return of 5% (assuming no other costs in this case). However, if the investor obtained 95% financing,
only $5,000 cash would be required at the closing table, and a bank or other lender would loan the
remaining $95,000 to acquire the property.
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Copyright © 2005-2010 SOBTEC REALTY, INC.
Kevin Berman
Licensed Florida Real Estate Broker
P: (954) 251.0324
F: (954).251.0321
info@sobtec.net
8550 W. State Road 84, Davie, Florida, 33324
Kevin Berman
Licensed Florida Real Estate Broker
P: (954) 251.0324
F: (954).251.0321
info@sobtec.net
8550 W. State Road 84, Davie, Florida, 33324
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