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Analyzing Investment Properties
March 2, 2009     Filed In:  analysis, investing
When considering the purchase of an investment property, you ought to account for the following investment benefits:
  • Cash Flow Before Taxes - if your rental income is $900 per month, and your expenses (mortgage, etc) are $800, you have positive cash flow.
  • Principal Reduction - unless you have an interest-only loan, each monthly rent payment helps to reduce the principal balance of your mortgage.
  • Tax Savings - this can vary significantly depending on your individual financial situation, but the "loss" (including depreciation) on your investment property can be used to reduce your tax liability.
  • Appreciation - though our current appreciation rate is somewhere between -1% and 2%, this is (in a longer timeframe0 an important investment benefit.
To help my clients understand these benefits, and to better understand the investment property that they are considering purchasing, I use the investment analysis worksheet below. 

Click on the image for more detail.

Investment Analysis 7.0
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Sep 03, 2010 (unless otherwise noted).
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com
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