Why Serious Investors Use Real Estate Investment Software
In this article we’ll consider why serious real estate investors looking to make the best return possible on their real estate investments use real estate investment software to evaluate investment opportunities.
1) It’s fast. Good real estate investing software makes it possible to analyze cash flows, rates of return, and profitability of rental properties in minutes. This allows individual investors to quickly and easily collect the data required for smart decision-making.
2) It’s precise. Good investment evaluation software makes accurate calculations for a wide-range of returns and measures deemed crucial to sound real estate analysis. Faulty math is the last thing an analyst should have to worry about.
3) The reports are informative. Good real estate investment software creates professional-quality reports investors can confidently pass on to colleagues, partners, and lenders.
4) It knows what data is required. Quality investment software provides specially designed forms that gather the appropriate facts and figures about a property. This is particularly helpful to investors with little or no real estate analysis experience because they just fill in the forms and print.
5) It keeps the seller’s data honest. Investors who have the ability to run the numbers themselves prevent anyone from making an unrealistic presentation of the property and perhaps “slipping one” by.
6) It’s inexpensive. Good realestate investment software does not have to cost an arm and a leg. Anyone can create top-notch real estate analysis presentations forever for just a few hundred dollars.
Okay, now let’s consider the alternative.
1) You can create your own spreadsheet. Excel makes it possible for anyone to mimic investing software solutions. But it takes time (lots of time) to develop the reports and calculations provided in good real estate investment software. You should ask yourself whether you are inept enough about real estate investing and Excel before you get started. Plus, remember that your goal is make a profit on investment properties and not to shave a few bucks off your analysis presentations.
2) You can rely on rules of thumb. It’s easy to calculate a property’s cap rate or gross rent multiplier. But what about cash-on-cash return, cash flow after tax, internal rate of return, and mortgage amortization? Bear in mind that you are planning to make a huge property investment, so you should rely on something more meaningful than on simple calculations you can do in your head.
3) You can accept the seller’s data. But it’s never a good idea to accept property data point blank because it leaves too much room for others to embellish reality. You must always verify the numbers you are presented for any investment opportunity so you can be sure that they comply with your real estate investing plan.
Once you’re ready to invest in good real estate investment software you’ve got to know what to look for. So here are a few suggestions.
1) Foremost, be sure that the software is user-friendly-that you know what to do from the moment you open it. If not, be sure you have a number you can call for tech support.
2) Preview the reports. Are they easy to read? Do they contain concise data on the cash flows, rates of return, and profitability you need to make intelligent investment decisions? Are they professional quality?
3) Consider what rates of return you desire. For example, are you interested only in suitable returns calculated without consideration for the elements of tax shelter, or would you prefer full consideration of tax shelter? If so, then look for real estate investment software that includes calculations for things such as depreciation, mortgage interest, amortization of loan points, and cash flow after tax.
4) Would you like both analysis and marketing presentations? If so, then look for a software solution that will create an Executive Summary or Marketing Package in addition to an APOD, Proforma Income Statement, and Rent Roll.
You get the idea.
The important thing is to realize that real estate investing is a business and real estate investment software is a tool that will help you to grow that business wisely. And in the same way that serious investors have come to rely on good real estate investment software to help them make smart investment property decisions, so should you.