Real Estate

Real estate refers to the industry that is most commonly tied to raw or developed land.  Real estate has its own set of business dynamics.   In accounting, real estate will include the structures and other improvements on the land in the total value accumulated.

Occupancy Rate – How to Evaluate

Temporary housing includes hotels, motels, resorts, apartment complexes and rental homes.   The number one tool to measure performance is occupancy rate.   This is the number of nights the facility is occupied against total available nights. 

Financial Leverage in Real Estate

Financial Leverage

Financial leverage refers to using a third party’s money to increase profit for the borrower.  In real estate the profit or equity in the property is the weight being lifted by the use of a lever (borrowing money) on the fulcrum (the property).

Replacement Reserves- Understanding the Fundamentals

Replacement Reserves

Long and short term housing rental businesses use a financial operations tool to maintain, repair and upgrade the physical facilities.  This tool is known as replacement reserves in the real estate industry.  In almost all cases it is a contractual agreement requirement between the mortgage lender and the borrower.

Don’t Flip Them, Finance The Flip!

Flipping Houses

The rage in real estate for the last 17 years has been flipping houses.  Simple principle of buy low, fix it up and sell high – House Flipping Business Dynamics.  What if I told you there was more money to be made with less risk and very little work if you simply finance the deal?  You would say I’m crazy.  Well, I’m going to show mathematically that I know what I’m talking about. 

Landlord – Business Dynamics and Economics

Landlord Business Dynamics

I love the game of Monopoly.  My sons enjoy playing it too.  But we all have the same complaint about the game; it takes forever to accumulate all the wealth and ultimately win the game.  Being a landlord means the same thing.  It will take a long time to accumulate wealth.  So for those of you considering becoming a landlord, there are certain business dynamics and economics you should understand. 

Apartment Complex Profit and Loss Statement – (Revenue Section) Best Presentation Format

In the apartment complex industry I have had the privilege of reviewing four different presentation formats prepared by different Certified Public Accounting Firms.  Interestingly enough, they were all distinctly different.  But one stood out!  It made much more sense than the others.  One of the other three had an interesting subsection and so I combined the best attributes of both. 

Real Estate Syndication

Real Estate Syndication

Have you ever wondered how apartment or office complexes are financed?  A typical complex will have 80 to 100 units and the cost of construction will approximate $7,000,000.  So where does this money come from?  Your average person will think it is financed by a mortgage of some sort. 

Real Estate Investment Trusts – REITs

REITs

Real Estate Investment Trusts are corporations, trusts or associations that act as agencies in real estate and associated mortgages. This is a specialized tax segment and it requires recognition by the Internal Revenue Service to operate as a Real Estate Investment Trust (REIT).

Syndication

Syndication

Syndication refers to a group of individuals or business entities working together to achieve a set goal(s).  In business, the goals vary.  The most common goal is to acquire capital and use the combined power of the group in exercising that capital for a better than average rate of return. 

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