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As you contemplate where to invest your money, real estate investment are discussed. Is it profitable to invest in a hamburger franchise? Is it more profitable to invest in stocks or should you simply keep the money in the bank? The more you look at the economy, the more you realize that the return on Real Estate Investments is the best choice. As a new investor, you are quite unsure about how to calculate your return. With the help of a CPA and this article, all will be disclosed.

An investment is not profitable unless at the end of the year there is money in the bank. When anyone is calculating the return on the investment, it must be more involved than just a 1040 and a schedule C. It must include time, effort, traveling and involvement. Some investments take very little effort and others take your whole world and more.

- Basic Calculations:

The basic calculations from the standpoint of a net sheet would be simply subtracting the expenses from the amount of money you received during the year. But when anyone is buying a property fresh, how do they know what calculations to do. It all starts with your Broker and ends with two minds put together to come up with a complete and workable plan.

Many investors and Brokers forget to work in the vacancy allowance when calculating a net sheet. The bank will allow 25% vacancy allowance when anyone is financing a property, because they are aware that there will be vacancies sometime during the year. If you are lucky the vacancy will be immediately filled, but just in case, you must allow at least a 15% vacancy allowance on your net sheet.

If you are worried about problem tenants, you can take out landlord insurance to cover yourself in case you would have to seek legal action against a tenant or to cover damage that is caused by a fire. The landlord's policy can be written to cover many things for the landlord and each company differs on exactly what is covered.

Besides vacancy allowances, you must allow for damages and repairs to the property. When figuring or calculating the net profit on a potential purchase, you need to allow at least 5% for repairs. So now we have 15% vacancy and 5% repairs. Hopefully there are no major repairs needed on the building.

- Building Inspections are necessary:

Always hire a building inspector prior to signing escrow instructions to make sure everything is in good shape, especially the roof and air conditioning units. These are your largest expenses on an apartment complex. Some buildings

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