3 Qualities To Look For In Real Estate Investment Properties
Bankrate’s 2019 survey revealed that 28% of Americans preferred real estate for long-term investment. As such, real estate remains Americans’ most popular long-term investment choice over stocks. People like real estate because it is highly profitable and less risky than other investment options. Many great real estate investments begin with finding promising properties worth purchasing. There is a lot to consider when making this big investment, whether you are a syndicator or an investor. Below are three essential qualities to look out for in promising real estate properties.
- High expected cash flow
It isn’t uncommon to find nice real estate properties with great value that lack the potential to generate decent cash flow. Therefore, always estimate a property’s expected cash flow before acquiring it. This way, you will know whether it is worth investing in. Generally, an excellent real estate property investment should offer you an instant positive cash flow, meaning the income you will derive from it will exceed the purchase price. You can follow the 1% rule to guide you when seeking properties worth investing in. The rule says that properties should generate at least 1% of their purchase price as monthly income. This rule ensures that properties cover their expenses, including insurance and other property ownership and maintenance-related costs.
If you are a real estate syndicator, you should undoubtedly be constantly searching for promising properties with the potential for positive cash. Also, it would help if you had a great legal team which you can find online, such as Syndication Attorneys (https://syndicationattorneys.com/) to help you prepare legal contracts and properly structure your syndicate to ensure that you and your investors can benefit significantly from such properties.
- Located in an area of constant development
Location is undoubtedly key in real estate, so many people naturally consider the neighborhood crime rate, amenities, and other factors when searching for a home. Indeed, a reported 8 in 10 Americans say they value their home’s location over its size. However, the development happening in your preferred property’s location is a key consideration to factor into your decision-making. If major companies are relocating there or you notice a lot of development happening, it would be best to buy the property since its value will likely go up in the future.
- Opportunities for profit
Real estate is an investment, so you should always approach it from a profit-making perspective. According to experts, there are two broad types of properties worth investing in if you adopt the buy and sell approach, popularly known as “flipping.” The first type involves properties sold for less than their present market value because their owners are experiencing financial difficulties. The other category involves properties sold for less than their market value due to design or structural issues. If you fix and flip a property, there is a big potential for a nice profit on your investment, but it demands significant time and effort.
Consequently, always select properties you can acquire at the lowest possible cost and sell for the highest possible price. Also, prioritize properties that you can refurbish and sell in six months or less to enjoy a quick ROI.