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PROAPOD
®Real Estate Investment Softwarewww.proapod.com
5 Things Even When the Numbers Don't Make Sense
 James R Kobzeff 
If the rental propertydoesn't seem to make financial sense after your initial analysis has been made, perhaps altering one or more of these will improve the financial picture and make theincome property a goodreal estate investment.
1) Income:
Can rents be increased, and can they be increased soon after you purchase the property? Would a change in the type of tenant in the building allow for higher rents, maybe theincome is suffering because of poor or non-existent management? Can the building be used insome other way to increase income, such as a motel, or small offices? Be certain local zoningallows for any proposed changes. Is it reasonable to conclude that the property has the potential to provide other income such as a coin operated laundry facility, garages, or storage rooms?
2) Expenses:
Take a close look at operating expenses to see whether any of them are excessive. If they are, is it reasonable to think that you can lower them? You can't control every expense but youmay save some money if you intend on doing your own lawn maintenance and repairs.
3) Financing:
Try various alternatives in financing to see how the mortgage impacts cash flow,rate of return, and profitability merely by applying various financing techniques. Whereas one typeof financing package might make your prospective real estate investment look unprofitable,another financing package might as easily turn your prospective property into a sound, profitableinvestment.
4) Cash flow:
Don't just consider the before-tax cash flow produced by the investment real estateto determine your overall benefits, but also look at the after-tax cash flow and determine what your  property will give you in the way of a return after taxes. It's always best to consider the elements of tax shelter such as the paper loss the IRS permits for income property depreciation.
5) Price:
Tweak the price to see its affect on the cash flow and rates of return. Then select a price based on the most favorable rates of return and prepare those figures to discuss them with theseller. You might be surprised to discover a seller willing to listen to reason.The point is that you should not throw out a real estate investment opportunity simply because thenumbers don't make sense. It might be possible perhaps, as the list above suggests, that you canstill modify some aspects of the purchase that might make it a good investment.
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Though you can accomplish each of the above with your own computations, it is strongly
©2009 James R Kobzeff. All rights reserved.
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