How do I know that I will profit from the property I am bying?

In Property Management - Asked by SUBASH C. - Sep 23, 2017
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Answer(s)

Steve S.
Property/Asset Manager
Durham, PA

From your due diligence. 1st find the Net operating income. NOI = Revenue - Expenses. You have to determine the property's cap rate, then find out the market's cap rate. Cap (%) = NOI/Price. To find the value you can use Value ($) = NOI/Market Cap Rate. Your purchase CAP Market CAP. Then you need to look at the rent rolls and profit and loss statement. This is not the entirety but it will give you good idea of whether the deal is good or not. If you need more help on this you can reach me at www.portfoliodeals.net

Sep 24, 2017
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Patrick K.
Broker/Agent
The Woodlands, TX

You won't...no profit is guaranteed. Nor can any broker guarantee you a profit

Sep 24, 2017
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Jay G.
Broker/Agent
El Centro, CA

There are hundreds of items you need to check for long and short term profit. You need to know the market and what is happening in the area. Everyone will tell you to learn about income and expenses. This is not enough. You need to know what will happen if you loose tenant or something is changing in area. e.g. you find a tenant who is leasing a retail space along highway which gives you great profit right now. Is it possible that there is a new highway coming nearby which will reduce traffic significantly along the existing highway? If that happens then tenants may leave and you may not get good future tenants which will really impact your profit.

Sep 27, 2017
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Anand B.
Broker/Agent
Arlington Heights, IL

Or you can hire a professional to do a risk-potential reward analysis. I do this major firms and investors all the time. I usually can give someone my opinion on viability in under an hour. Others may be cheaper/take longer. There is a lot more to the risk assessment than just a math calculation, you want some tenant and market opinion as well.

Sep 28, 2017
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