11 Things You Want in Real Estate Investment Software

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Real Estate Investment Software

11 Things You Want in Real Estate Investment Software

By James Kobzeff

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Real estate investment software is one of the best tools real estate investors and professionals can use to analyze and evaluate multifamily property.

Here's why.

Good real estate investment software provides the forms, makes the computations, and creates the reports required for a real estate analysis. Any user (experienced or not) can create professional-quality rental property reports for a myriad of reasons, such as decision-making, or as property presentations to buyers, sellers, colleagues, partners, or to lenders. All within minutes.

Moreover, real estate investing is all about the numbers. Therefore, real estate investors who are considering real estate investment opportunities look for and make their investment decisions based upon the bottom line. So real estate investment software becomes an essential tool for real estate analysis because it provides quick and concise cash flow, rate of return, and property valuation numbers.

Though most real estate analysts prefer to buy real estate investment software, it should be pointed out, though, that you do have other options.

You can, for instance, scratch out the numbers with a pad and pencil, or perhaps make a hasty rule-of-thumb calculation off the top of your head. But it should be obvious that these approaches, although maybe useful in limited cases, do not provide the best solution. They clearly do not provide the deep property analysis required to make a smart investment decision, nor do they include the data likely to sway the opinion of any other person, entity, or institution like a partner or lender.

You can also use Excel and develop your own spreadsheet. The problem here is time. It takes countless hours to embed the computations properly, and to format the forms and reports, even if you're familiar with Excel. If you're not familiar with Excel, then triple the time.

Before you pursue those options, though, be mindful that successful real estate professionals do not waste time or effort reinventing the wheel. They prefer to invest in real estate software so they can spend their time generating moneymaking deals.

But I digress. So let's get back on topic and look at what you should expect in good real estate investment software.

1. Easy to learn and use

You want simply to enter the values and have the software do the rest. You never want to look and wonder, "What do I do next?" To check, examine the website. Remember that the same company praising their software publishes the website. If the website is not well organized and informative, or if its lack-luster and confusing, the software might not be what you want.

2. Unlimited units

You want the ability to analyze one unit or a thousand units, or even more units if necessary.

3. Loan amortization

You want ample control over the financing assumptions. For example, you want the ability to enter multiple loans, the flexibility to enter the loan either as a loan assumption or as a new loan, and then have it computed as either a fixed or interest-only rate.

4. Crucial rates of return

You want the real estate investment software to calculate cash flow returns and loan ratios such as cap rate, gross rent multiplier, cash on cash, operating expense ratio, net operating income, debt coverage ratio, loan-to-value ratio, break-even ratio, and profitability index.

5. Tax shelter computations

You want the ability to determine cash flow after tax as well as your tax benefit or loss. To do this, the real estate investment software must include computations for tax shelter elements such as cost recovery and mortgage interest.

6. Time value of money

You want the software to create computations involving the time value of money such as internal rate of return and net present value. Why? Because you will discover that in real estate investing, the timing of cash receipts can be as important as the amount.

7. Concise, top-quality reports

You want printable reports that are easy to read and have eye-catching appeal. Remember, you might be trying to influence the opinion of a buyer, seller, colleague, or lender regarding this property, and they might have to make their decision based on the reports even before seeing the property.

8. Upgradeable versions

You want the ability to "upgrade" from a less-than-platinum-grade-version to a platinum-grade-version without having to re-purchase the platinum-grade version at full retail price.

9. Technical support

You want to have open access to tech support in the event of a question or problem. Preferably, email and telephone support . Exercise caution if the company or developer appears overly allusive--there is nothing more frustrating than encountering a problem and then not being able to talk to the software developer about it.

10. Affordability

You should be able to find very good real estate investment software on the web for about $300. Which is very affordable given the fact that you will be able to start working with income-producing property immediately.

11. Customer satisfaction

You should examine the names, professions, and titles of customers who have submitted a testimonial. If you can relate, then you may have a winner.

There are other things you want real estate investment software to provide such as seamless printing, picture function, branding and name-rider integration, email capability, help file, Windows compatibility, and so on. The point is not to be hasty. Spend time on each website looking around to be sure you get the essentials and perhaps a little extra at the best price possible.

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About the Author

James Kobzeff developed ProAPOD to make real estate investment software easy and affordable for real estate professionals and investors. Discover how you can create cash flow analysis and rate of return presentations in minutes! Go to => http://www.proapod.com

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Net Present Value - How to Use NPV to Evaluate the Price of a Property

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By James Kobzeff

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Net Present Value, is often used by a real estate investor to try to evaluate the price for a rental property with time value of money consideration has undoubtedly used .

Although it should not be used as the only factor to decide whether a real estate investment provides a good buying opportunity, Net Present Value does provide the investor with a quick and easy way to determine whether the price that will be paid for the property will yield the investor's desired rate of return (discount rate).

What is net present value?

NPV is the difference between the present value (PV) of all future cash flows produced by a rental property and the amount of cash investment (or, initial investment; i.e., down payment and closing costs) required to purchase the property. For example, let's assume that the real investor desires a 10% yield on all future cash flows, must invest $100,000 cash to purchase the rental property that might produce those cash flows, and wants to know whether the price he will pay achieves his desired yield. He would calculate NPV.

Here's how it works.

First, all future cash flows would be discounted back at 10% to determine the present value of those cash flows. Secondly, the $100,000 initial investment would be deducted from the PV. The difference between the two is the NPV. For example, if the present value winds up equaling $110,000, the $100,000 would be subtracted to determine a net present value of $10,000 ($110,000 - 100,000 = 10,000). Whereas, if the PV calculates at $90,000, the NPV would be -$10,000 ($90,000 - 100,000 = -10,000).

What does it mean?

Whenever the NPV is greater than zero, it means that the discounted value of the future cash flows is greater than the initial investment. In other words, you're getting a good deal and getting a rate of return that is actually higher than the discount rate you desire (in fact, you can pay $10,000 more for the property and still achieve a 10% yield). Likewise, any NPV less than zero means the opposite. You're getting a lower rate of return than you desire, and would have to pay $10,000 less for the property to get a 10% rate of return.

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About the Author - James R Kobzeff

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James is the developer of ProAPOD, a very affordable real estate investment software solution that includes computations for NPV. Discover how to create rental property analysis presentations with automatic calculations for net present value and other rates of return in minutes! Go to => http://www.proapod.com

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Return from this page Net Present Value, using NPV to evaluate the price of a property. Back To the Real Estate Investment Software Page Or To the Home Page Freedom Steps With Property Investing

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Real Estate Investment Property can give you Financial Freedom

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Financial Freedom Is Within Your Reach With Real Estate Investment Property

Financial freedom can be yours with real estate investment property.
You can have financial freedom, sooner than you think. Here is a quick overview of how to do it.

1. Start with an evaluation of your current financial position. See this real estate investment finance for an effective strategy to get favourable (lending) results from a bank or other financial institution.

How To Build A Cash Flow Model For Your Real Estate Investment Property

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By Joe Tosolt

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About To Start Investing In Real Estate?

Are you about to start investing in real estate? Or perhaps you've already put your toe in the water but want to learn more. Here is an overview of the factors you need to take a look at in order to project your potential return on an investment.

• Purchase price - obviously, the amount of money you put out for the property is significant in determining your investment outcome.
• The annual appreciation rate at which you expect the property's value to increase.
• How many years you expect to hold the property. Combined with the 2 figures above, this will enable you to estimate a future selling price.
• Number of rental units, and rent you expect to receive from each unit.
• Annual rate of rent appreciation.
• Expected unoccupancy rate - it's important to remember that tenants come and go, and will occasionally leave you with empty rental units. It's best to plan that into your projection.
• Any miscellaneous revenue you anticipate (laundry facilities, etc.), and the rate at which you expect those revenues to grow.
• Property management fees. Even if you expect to manage the property yourself, it's best to budget in an allowance for professional property management. First, this rewards you for the time and effort you invest. Second, it ensures that you are covered if for some unanticipated reason you need to turn the management over to a pro at some point in the future.
• Last, but not least, you need to know your opportunity cost, something that big investors would call the 'cost of capital'. For example, if you can earn 5% by keeping your money in the bank, you're going to want a lot more than 5% for taking on the risk and time investments required by a rental property!
• Annual operating expenses, and the rate at which you expect those expenses to increase over your term of ownership.
• Property taxes and rate of annual increase.
• Insurance and rate of annual increase. It's critical to insure your substantial investment!
• Any miscellaneous expenses, and rate of annual increase.
• Depreciation expense. To determine this, you'll need to estimate the building's assessed value as a percent of the total purchase price.
• Your annual capital investments in the property. You were planning to budget on capital improvements, weren't you?
• Downpayment - how much cash are you putting in upfront?
• Bank fees - how many points do you expect to pay, and what closing fees do you expect to incur if you will putting a mortgage on the property?
• What mortgage interest rate do you expect? And how long will the payback period be?

Now that you've got all the numbers laid out in front of you, you 'just' need to build a financial model which will allow you to project cash flow throughout your ownership term, and then use time value of money calculations to create a present value of those flows. Compare the present value of your future cash receipts against the amount of cash you will outlay upfront. If it's greater, congratulations- you have positive Net Present Value, and this property looks attractive. If the result is negative, it's a red flag-- you need to take another look, because this may not be a good deal for you.

The obvious comment you might have is... "This all sounds awful hard! Aren't there tools which can help me?"

The good news is that there are! In fact you can use an online investment property calculator which will do all of the heavy calculating for you. You simply plug in the numbers, and review the results. Now THAT's some smart investing!

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Here's some great news: thorough financial analysis doesn’t need to cost a lot of money or take up much of your time. The Real Estate Genius investment property calculator runs the numbers and calculates the cash flow instantly– you just gather the facts, and plug in your assumptions.

Joe Tosolt is the president of Real Estate Genius, LLC, which empowers property investors with fast, powerful tools for performing discount cash flow analysis and projecting financial returns on prospective property investments. Learn more about this easy-to-use tool at Real Estate Genius.

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Help Simplify your Real Estate Investing Decisions with Real Estate Investment Software

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Real Estate Investment Software

Help Simplify your Real Estate Investing Decisions

Real estate investment software can be very useful to help you in two basic areas of your investing activities:

1. Making decisions as to whether or not to invest in a particular piece of real estate.
2. Real estate software can also help you after making a property purchase by helping you track and manage your property investment(s).

DISCOVER AND ANALYSE the various financial aspects of the property, useful software exists to help you construct an Annual Property Operating Data sheet or APOD to give you a quick evaluation of property performance for the first year of ownership, project future cash flow performance with a cash flow proforma or analyse the the property using Net Present Value (NPV) to consider the time value of money.

However none of these pieces of real estate investment software can remove or replace the need for you to make the final decision based on your personal goals and circumstances.

Real estate investment analysis software and Free Real estate investment analysis software helps you in making the decision whether or not to buy a particular property.

Real estate investment management software which helps you keep track of the profitability of any particular property as well as manage the day to day issues such as maintenance, collection of rent payments, and other issues.

There are various types of software and websites available on sites like Yahoo, to integrated software with many functions.

Real estate investment software can be basically divided into two tpypes.

Real estate investment analysis software which helps you in making the decision whether or not to buy a particular property.

Real estate investment management software which helps you keep track of the profitability of any particular property as well as manage the day to day issues such as maintenance, collection of rent payments, and other issues.

There are various types of property investment software packages ranging from free real estate investment software available on sites like Yahoo, to integrated software with many functions.

Related pages you might like to explore are:

1. Real Estate Investment Calculators
2. Free Real Estate Analysis Software
3. Free Real Estate Investment Software
4. Free Real Estate Investment Software
5. Real Estate Investment Property Analysis Software

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Return From Real Estate Investment Software To Real Estate Investment Selection Methods Or go to Freedom Steps With Property Investing

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