REAL ESTATE AS AN INVESTMENT
There are many ways to analyze real estate as an investment. For non-rental property then the RETURN ON INVESTMENT (ROI) is the gain minus the cost, then divided by the cost. Returns of 6% (for “safe” investment properties) up to 40% (for riskier properties) are generally desired. Some people consider 15% a “good” return. The time frame of ownership is an important factor. The ROI is realized upon the sale of the property and is usually for longer term investors as compared with investors looking for immediate cash flow from rental income.
For rental property investments the term used to analyze is the “CAP RATE” which is the net operating income (NOI: gross income minus all expenses) divided by the purchase price. Acceptable cap rates are generally from 3% to 8%. The 3% figure can be used for high demand areas. These figures don’t include financing.
In Rockaway, I’ve sold many investment properties over the years. I have a few listings now which are worthy of consideration.
The Jewish holiday of Yom Kippur just concluded. I hope all my observant friends had an “easy fast.” I wish them all a happy and healthy new year. The Sukkot holiday begins Sunday night, October 9, and ends one week later. No work is permitted for the observant on October 10 and 11. Call me. Love, Robin.