Real Estate Investing can be a scary and uncertain proposition. In order to minimize your anxiety and risk, it is important to know what to look for when analyzing a property. Gathering the following information will assist you in determining whether or not a property is a good investment or whether you should walk away.
First, gather all of the information you can on the property itself. How old is it? How many units are there? What is the square feet? Are the units separately metered? Are there garage spaces included? Is there a coin operated laundry on site? These factors will all influence your bottom line.
Secondly, it is important to inspect the property in person. What is the condition? How much rehab work will be needed to prepare it for your renters? The better the condition of the property, the more rent you can expect to receive.
Thirdly, how do you plan to purchase the property? If you pay cash, your return on your investment will be greater than if you have a mortgage to service.
Finally, what is the current cash flow of the property? How much income is the property currently producing? What are the costs of maintaining the property, property taxes, insurance, property management fees, etc. The current owner should be able to provide you with the NOI (Net Operating Income) of the property. Be advised that some sellers will overestimate rental income and neglect to income maintenance expenses that may make the property less desirable.
The more complete the information you have gathered, the better your chances of making a good decision. As CRE Investment Specialists, we can help you. We can create a Current Market Analysis of the property to let you see how it compares to similar properties and assist you in gathering the information you will need to make sure you are purchasing a property that will give you a good ROI (Return on Investment) and that you purchase it at the best possible price.
Until Next Time,
Dick Gibb and Sherri Tyler