BUYING INVESTMENT PROPERTY: A SAMPLE STRATEGY FOR RENTALS

Buying Investment Property - A Sample Strategy For Rentals

Investing in real estate specific residential properties is a considerable way for new investors. Many see this as an opportunity to own real estate.

However, every investor should study and understand the real estate and the real estate market relatedness both are synched together when investing in real estate. And select only investments that are expected to earn profits under reasonable assumptions. The first step towards developing these reasonable assumptions and buying an investment property is to have a rational investment strategy.  

Let's examine an imaginary real estate investor's four-step strategy.

Step One - Know your goals for real estate investing and have Several Exit Strategy 

• Real Estate is broad and so are the investment levels of each investing facet.
• Will you be a Sole Investor if just starting as a real estate investor or will you form or create an LLC, LP, or Incorporate. Or simply remain a sole Proprietor?
• What and how will I manage the properties being acquired?
• How will I manage my real estate Properties
• What properties should I purchase or avoid in order to get a profitable investment return?
• When do you work with a General Contractor or Property Manager as you continue to invest in real estate?

Step Two - Research You Local Area and Compare it to the real estate market.  

 It's foremost easy to begin in one researched local area. If you are the market is showing signs of expansion, then you might want to expand as well. But only expand until you have acquired more investing knowledge, expertise, and skills that you have developed along the way!  Most investors and new investor start with residential properties with the hopes of converting these to rental tenant units. But consider these few simple tenancy demographics as outlined:

• The migration of the residents, are they moving in or from the area? 
•  How long do homes remain on the market compared to surrounding areas?  
• What is the average annual market appreciation or depreciation? 
• Are their new industries or companies moving into the community or exiting the community?
• What does that City or County Master Community[City] Plan looks like for your area? Is it growing or declining in job growth.
• Know the buyers highly invested preferences area or locations. Its location for the investors and property location, location, location does need to be foremost in your mind, at all times!

Step Three - Suggestion You'll need a team. 

This suggests you will need a team. If not now, as you and your busy grows sho should your consideration for forming a team. The available resource will dictate, having a team or not. But as your resources and investing grow, consider forming a team to help grow your investing business. 

That team member should have a skill, expertise or knowledge which you might lack. If, you decide to place a real estate agent or realtor on your team, then consider a realtor with care. Next, consider having an attorney but make you want to be certain that the attorney is fully knowledgeable about real estate and real estate investing as part of their major area of specialty or concentration. As your portfolio grows, you might consider adding a CPA tax advisor and an insurance agent. If you are not the handyman type you will need a general contractor, someone who is properly licensed, bonded and insured whom you can call to help you calibrate real estate property repair costs, rehabbing and renovation costs and estimates.

Step Four - Investment Property Selection. 

Most real estate investors concentrate on what is known as " bread and butter” investment property.  These are residence investing property. You’ll want to target the attractive neighborhoods that will appeal to employed tenants.  These are your customers and clients. Should they want to purchase, you have a property that the return will permit, or give you a percentage rental rate for adjusting or offering a rental increase.  Select homes that are local to the highly invested area based on MSA’s and Demographics of active investors. And avoid high maintenance homes. For example[ i.e. avoid swimming pools and working fireplaces]. 

The new home purchaser, investor or seller, this is an excellent opportunity for buying and selling an investment property. The FMV and property decrease in pricing make it possible to buy low for cash or with financing if approved. If approved you might be able to purchase and build equity. Is real estate investing for everyone."No, and Yes". Real Estate and Investing in real estate as a business or as an investor requires, research with extreme dedication to fully learn so you know and understands how the process works. Like any investment, you need to know what it is that you are wanting to accomplish, have goals and set your investing limitations. Above all learn to acquaint yourself to understand the real estate industry and what's exactly involved in investing and the real estate markets.

The article was written by Valerie Robinson, REI & CME

Copyright@ VRCAPITAL INVESTMENTS & CONVERSION MARKETING EXPERTZ,LLC ,September 15, 2019