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Given the amount of money involved in real estate, investing in it should take a lot of consideration. Though there are many tell-tale signs that a particular investment is a bad one, there are also a few signs that some deals are good.
For example, if the percentage of the before-tax income relative to the total cash investment or in most cases, the down payment, is positive, then that’s a good sign. This is called the cash-on-cash return, and a person planning to invest in real estate should always be aware of this. Computing for this is quite easy. Simply divide the before-tax income by the tax investment (total). The rule of thumb here is the higher the value of properties, the lower the chances of getting positive cash-on-cash returns.
Another sign of a good real estate investment is that it is low-risk. There is only one way to know for sure – research. With enough effort to sift through all the papers and go through all the legwork, people can find out if properties are good or bad.
But one of the best signs that investing in the property is a good idea is that it won’t take too much time or effort to manage the place. This is, strictly speaking, long-term. The high-priced property takes a lot of time to manage, while cheaper ones usually afford the investor more time to do other things.
Benderson Development Company Inc. is among America’s largest privately-owned companies, and it manages an array of real estate holding across 38 states. It has received industry recognition for its commitment to excellence. For more information about Benderson Development, visit this Twitter page.
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