There are so many types of investments and knowing which ones are good will depend on the deal itself, so generalizing might not be the key here, but a good Real Estate investment has some clear assets that allow you to be certain that a deal might work or it might not, so let’s dive into some very clear ways to know if it’s good or not!
1. Is it listed?
So ok, we have nothing against the MLS, as it is our primary source of deals, but off market properties might be something you’re going to love, they are not listed, so they are direct deals with the seller, in these case scenario if you get it early you’ll get your pot of gold, and usually they do go quicker since there’s less competition and only with serious buyers! This type of properties can work great if you want to start there!
If you want to know further about the off market properties, here’s a great article all about the 5 benefits they can bring! Check it out here! But also, if you want to know how to get them, here’s another article that tells you all about it, you can find it here! Now, that’s not something for everyone, some prefer those deals to be delivered to them, so in that case, we do have a mailing list, you can subscribe here!
2. Market value?
The market value plays a huge part of the business itself, it is extremely important for you to know your comps and if the property is under market value, at the very least a 30% under! That means you can work around it and make a good sale with it, keep your numbers right at all times, but do take in accountability the amount of money you are paying for and that way you will know if it is worth the risk!
Do keep in mind that market price and market value are not the same thing! If you are confused here’s an amazing blog post explaining the difference on them here in Real Estate! Go over here to check it out! You can also go over to our blogpost all about how the market is behaving here in South Florida, it will you a guideline on what to look for when it comes to your market value and market price!
3. Job market!
You might think, what? Why? (probably not, because it’s common knowledge, but let’s say you are) The job market was and is and will always be a key factor on everything you do here, they drive people to specific locations, which means if there are big commercial areas that require a lot of people to live in, so when the job market is going up, you have better chances of it being good on you! You can rent them and get a big cash flow on these amazing deals!
Here’s a good definition of what the job market is, but it is up to you to do you own due diligence on how to apply it on your analysis! Here’s also a in-depth analysis of what exactly would happen to the new city in which Amazon puts their second HQ!
Some will tell you Location is the key to everything, but quite honestly while it is highly important is not the key, sometimes houses in a less popular location can be great assets because you can get them at a very small price and that area might get popular, so your investment can appreciate in equity! Think of California, the way Silicon Valley appreciated so fast in a such a small span of time, you can apply that to every market and still come up on top, because while location was a pivotal point here, it wasn’t what made it a success, it was the job market!
There’s a fantastic article explaining why Location is so important and used as a marketing strategy when it comes to Real Estate, you can read all about it right here, to see that is not all fun and games around that topic!
Yes, actually! Development of properties in any area can be highly beneficial for those who are trying to invest on Real Estate, because there’s going to be more demand to purchase houses around the area, there will be appreciation in prices and the market value on the house near it will rise! So, keep up with where exactly are properties getting developed, no matter if it’s a small gated community or a big apartment complex, development areas are huge when it comes to smaller investing properties!
Do full research, while there’s a lot of tools online to know the vacancy rates of certain areas, your own due diligence might be something that will bring you better results, so go around the neighborhood you are eyeing and see how many houses are empty and how many aren’t, you might be thinking, but what if at the time I go they’re out at work? Well, you have to do a few rounds at different times, and see which ones are and which one aren’t! That way you can have a better understanding of exactly how many of them are occupied!
Actually, this is something not a lot of investors care for, and it can be game changer! By community we mean the way the community behaves, so if they have activities they do, if there’s a park around, even a public pool! Why? Because you can target families, which can be a great source of rental material! Some families prefer places with good common areas, not necessarily gated communities but areas that will allow them to have a better sense of belonging, activities and building relationships with the neighbors, so yeah, check the way the community behaves!
There are many ways to know if a property is good or not, and sometimes it has nothing to do with this list! It usually depends on exactly what the investor is looking for, as some don’t go that deep, and focus on the money side of the deal, which is still highly important but not the key to utter success! Anyways, do let us know, do you guys look into this? What makes a good investment for you?