When it comes to real estate investing the most important things are stability and your bottom line, nothing else matters. There have been too many cases when I am seeing newbies get caught up in the cosmetics of a place rather than the actual value it can bring.
As an investor, whenever you are looking for a property, it is essential to remove your own bias and preferences. It’s likely What you consider terrible may be completely livable and decent to someone else. Also, many times, the things that detract us from a unit are an easy fix with a few contractors quotes. However, the amount paid for the property can’t be taken back once it happens, and that’s why it’s essential to make the right decisions the first time.
Whenever you are looking at purchasing a property, the following items should be on your checklist.
The Neighborhood- is it safe, is it livable, is it close to transportation or a major highway? Does it have decent schools? Will the Neighborhood appreciate value increase over time?
The price – Is it over or underpriced after looking at market trends l. If you do minor upgrades, can you raise the value? What kind of repairs does it need? How much is the cost of the repairs? How much profit will you have after debt service every month?
Clientele – Will you do long term or short term rentals (Airbnb). Do you want high-end tenants? Is your location more suitable for blue collar or white collar workers? Will you take government assistance tenants?
Management – Will you hire a property manager? If not, who will manage it? Do you have reliable contractors? How will you collect rent? Will you accept online payments or checks? How do you plan to find tenants? What will be your process to screen tenants?
Come Up With A Bullet Proof Strategy
These are all ideal questions and scenarios we would strongly suggest you think about before investing in a property. Tenants are often very hard on rentals so unless you like spending money we wouldn’t recommend putting all the bells and whistles in your units! Please keep it simple; less is more as a landlord.
A real deal has an excellent location a low or no debt service and excellent cash flow. If you are shopping based on your personal preferences of wanting something new and shiny, you will end up overpaying for your investment which, will, in turn, kill your cash flow.
Keep the purchase price reasonable, and your overhead low and most importantly have a budget for expenses. Real Estate investing can be quite lucrative and straightforward when done correctly; there’s no point in complicating things. Buy in decent areas near public transportation with competitive rental markets. Remember to screen every tenant and always trust your gut never, and I mean never ignore red flags.
Now get out there and get you some property!
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