Have you ever considered investing in real estate? With the market heating up, it seems that now is the time to start building or rebuilding your real estate portfolio. There are plenty of tools to help investors analyze potential investment properties, one of which is referred to as the break even point or “BEP.” This is the most general indicator for an investor to look at when making a purchase decision. The break even point has grown in popularity as a way to state simply, When will your property turn from an expense into a profit?”There is a simple formula to calculate your break even point in which the outcome is the number of years it will take your property to become profitable for you.
The break even point is calculated like this.
Annual Debt Service + Annual Operating Expenses
Break Even Point = ——————————
Annual Effective Gross Income
A break even point of 100 means that a property is not making any profit. Which translates to say all of the property’s income is required to pay debt service and operating expenses. The typical break even point ranges from 60 to 95 when purchasing a new property. While some real estate investors tend to spread investment over several properties, it is often a much more profitable and less complex option to invest in a multi-unit development yielding multiple revenues from one property while having a centralized operation that can be managed more easily under a single entity.
Eklipse Real Estate is ready to introduce a new investment property with 29 units located at 8654 Parthenia Place, North Hills, CA 91343. North Hills is a community in the San Fernando Valley of the city of Los Angeles, California. North Hills West’s logo is “tree in the city” and the town slogan as voted on by the 2010 – 2012 Neighborhood Council is “Fostering Community.”