The process of purchasing an investment property can at times seem overwhelming. Especially if it is something you've not done before or only once or twice a year. On the face of it, isn't it just like buying any other house?............No!
You actually use a different side of the brain to process the purchase of an investment property than you do when buying your own home. The motivations, concerns and thought processes are different. In fact there is a whole new language involved. Annual Operating income, Cap Rate, Gross Operating Income, and Cash on Cash are some of the words and concepts that you need to understand to make a sound investment decision. After all you could put your money in a CD, Stocks, Bonds or Mutual Funds. When considering a real estate investment you are asking yourself "Why should I put my money here? Will I do better than if I invest it in something else?"
One way to answer this question is to sit down with a potential investment and break out a piece of paper and a pencil. The upside to this method is that it takes no batteries, electricity or computer (though a calculator would be handy).
A much easier way in my opinion, is to use a software program that you load onto your computer, especially helpful if you are going to compare several properties or investments to each other.
I've come across an excellent program that does just that. It is called Star Analyzer from a company by the name of Wondering Star http://www.wanderingstar.com/
Just like any new program it does takes a few minutes to get used to the layout and the information it needs. However once you input your first potential investment it quickly becomes apparent how useful this tool is. It will allow you to input multiple potential real estate investments. It will then compare these to each other, as well as to other financial investments. It is wonderful to input once then use often. You can also play "what if" scenarios. What if I put more down. What if I charge more rent. It will also carry your investment and its returns out into the future so that you can see how much you are making in lets say ten years.
Star Analysis even comes with its own mini investment course as well as a trial period to get you settled in. I highly recommend that you check it out at http://www.wanderintstar.com/. I use it as I help investors as well as for myself.
See a demenstration: http://www.wanderingstar.com