Pre-investing: Before Investing in Real Estate

Introduction

• Start here

1. Case Study: Joe's First Investment

• Why invest in real estate?
• Meet Joe
• Which market will Joe choose to invest in?
• Which property will Joe choose to buy?
• How much financing will Joe use?
• Quick peek at Joe's investment financial model

2. The Many Ways to Invest in Real Estate

• There is more than one way to invest in real estate
• Introduction to real estate asset types
• Introduction to investment strategies
• Strategies for first time investors

3. Real Estate Market Cycles

• Overview of real estate market cycles
• The recovery phase
• The expansion phase
• The hypersupply phase
• The recession phase
• The next bust?

4. How to Value a Property

• To buy profitably, you must value accurately
• The cost approach to valuation
• The comparable sales approach to valuation
• The income approach to valuation

5. Understanding Your Market

• Where to get the data
• Regional analysis
• Neighborhood analysis
• Competitive analysis

6. What Makes a Good Investment?

• What makes a good investment?
• Discounted cash flow and the net present value (NPV)
• Discount rate
• NPV demonstration
• Measuring efficiency: Internal rate of return (IRR)
• IRR demonstration
• Measuring magnitude: Cash multiple
• How to use the measures
• NPV vs. IRR
• The terminal value of an indefinitely held rental
• Investment yields and capitalization rates
• Measures of return summary

7. Understanding Leverage

• Components of debt
• Interest-only vs. amortized loans
• The amortization calculator
• How leverage impacts investment returns
• Debt leverage summary

8. Case Study: Rental Income Property Analysis

• Case study #2 overview
• Market research, part 1
• Market research, part 2
• Detailed look at the back of the envelope (BOE) analysis

Conclusion

• Congratulations