4 Considerations for Real Estate Investors
As real estate investors it can be easy to get excited about a property that comes along and seems like a good fit for you to invest in. Sometimes emotions carry investors into overlooking considerations that would have warned them away from the property. If you are investing in real estate your main consideration should be your bottom line, turning a profit.
Thinking through these four topics before purchasing a property should keep real estate investors focused in the right areas.
- Exit Strategy
Before you purchase any property you need to know what your exit strategy is and what steps you need to take to get there. If you are purchasing the property as a rehab that you will sell you need to obtain estimates on the work that is required to get the house ready to sell. If you are planning on renting the property be sure to have all of the key players in place. Talk to a property manager and even go as far as seeing if you can locate potential tenants. The more prepared you are along the way the faster the process will move along and the quicker the property can turn a profit.
- Is it Possible and Does it Make Sense?
There are plenty of options that are possible for real estate investors, but it’s up to you to determine if it makes sense for your strategy. If you have an incredible vision for a property you are interested in buying do a little research to see if the market can support it. Do not be so prideful that you lose money on an investment because you were unwilling to admit that it wasn’t the best idea.
- Target Market
Before you purchase a property and begin making changes you want to establish who your target market is. High-end clients require high end finishes in a home. If your target market is families with young children in a good school district there will be small additions you can make that will make the house more appealing to parents. Before you spend any money on a property have an established plan.
- Research
Take the time to do your due diligence before purchasing a property. This extends beyond a simple inspection and title check. Be sure to drive by the house at different times of the day to see what is happening in the area. The house that appears nice because of its close location to the local school could be a traffic nightmare when school lets out for the day. Or, when the neighbors are home from work you might be able to see what type of activity is taking place in the neighborhood. Check with the government to compare what the tax report shows compared to what the house looks like. If there was work completed that was not permitted you will want to double-check the work to see that it was completed to code.
Keeping your eye on the bottom line of an investment deal is the only way to ensure real estate investors are making the best financial decision possible. If you complete all of the steps above and everything checks out, it’s time to make an offer. Having a plan in place when you get to this step will help you to continue moving the process along until you have cash in your pocket.