Analyzing a real estate investment.
I’m a numbers guy says Ray Martin of Easton Connecticut. Before I purchase a property I have a very complex performer and criteria that I use to analyze each investment. Leaving nothing by the wayside. Catching my team does a five, seven, and 10 year projection on all properties. Atcheson not an easy taskBut we have found it to be extremely accurate.
However all investors need a simple formula that utilizes Rough numbers to get good baseline understanding of the investment before it goes to the next level.
Keeping in mind that Ray Martin not only ask as a broker and consultant to the real estate industry, he is also a developer and has a substantial amount of real estate investments of his own.
First to keep in mind that all attorneys are not business people. As a matter of fact most attorneys just process paperwork. When do you find an attorney with a lot of business sense who also has real estate investments that’s the person you want to stay close to. Never take financial advice from an attorney who has no real estate investing experience, leave that work to your CPA and real estate consultant.
The initial things Ray Martin looks for for any real estate purchase are as follows. Growth and stability of the area market, price trends, stability of the municipality, Positive jobs growth policy, and availability of similar properties. That will narrow down your focus to a certain Geographic area with a specific tenant demographic.
When it comes to the numbers, stick with NOI and cash on cash returns for your initial analysis. That should be enough to narrow down your prospect properties. Once you get down to five or six properties we can dive deeper into the numbers.
A full and well thought out pro forma is not an easy task and you do need the help of a real estate professional to complete it properly. I’ve seen pro formas done on a half sheet of paper. At The Martin Agency our performers are about 15 pages in size. Long before we get to your Rate we’re going to take into consideration many things most investors And real estate agents don’t know exist. Such as loan-to-value ratio, equity discount or return on capital catch, change in capital value over your projected hold period, mortgage cap-rate as it compares to the debt service of your principal, changing property value, change in income, income stream over base curve tax savings, deferred maintenance and depreciation fluctuations. Just to name a few.
Ray Martin has multiple offices in Connecticut and is also licensed in New York, Rhode Island, North Carolina, Florida. Additionally he owns real estate in all of the states as well as several others.
The Martin Agency is available for all your brokerage, consulting, and real estate management needs. Give us a call or send us an email to experience what high-performance real estate is.
Call for a Consultation +1-203-900-8975
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