#3Cent Thursday | EPISODE 8
TOP 3 TRAITS OF EVERY GREAT REAL ESTATE INVESTMENT
Are you starting to invest in real estate, but don’t know what to look for? Don’t worry, we’re here to help! Today, we’re going to share with you three traits that every great real estate investment will have!
If you are adventuring on your first real estate investment, the whole process can be especially…convoluted, confusing, and scary…right? To get off on the right foot, the following are boxes you want to make sure are checked as you analyze each real estate investment option.
Let’s begin our countdown!
TRAIT #3 – A GOOD LOCATION!
So if you’re looking at a rental property as your investment, a good location will typically provide you with better renters, less vandalism, and higher equity gains. If you’re looking at a flip property as your investment, buying the cheapest house in the best area will usually maximize your returns. A good location is not just important when purchasing a personal property, but it is ideal when purchasing an investment property as well.
TRAIT #2 – TAX ADVANTAGES!
So this will typically apply to rental properties, however tax advantages are one of the main benefits of investing in real estate! You may be able to deduct property taxes, mortgage interest, expenses, and/or depreciation—depending on what your goal is. You should definitely talk to your CPA to discuss further, however a great real estate investment will provide you with great tax advantages as well! Yippee, we love those tax breaks!
TRAIT #1 – IT PENCILS!
So this may be obvious, however it should not be overlooked! When we ask “Does it pencil?” we mean that after calculating all of the money you will have to put into the project, then all of the money you will gain from the project, will you be profitable? If you are analyzing a rental property, you want to calculate the cap rate, the gross multiplier, and any Mello-Roos or HOA fees that it might have, and make sure that monthly return is in your favor. If you are eyeballing a flip property, you want to look at the cost for improvements, as well as any costs to buy and sell the property, and will you have made money at the end of the day? In addition, just because it is profitable, doesn’t mean it will be worth your time. This becomes a personal decision where the amount of effort you put into the project needs to equate to a certain dollar amount at the end of the day. So again, after calculating all costs and returns, make sure the project as a whole pencils and is worthwhile for you.
Thank you so much for reading, and we hope you've found this information helpful! Please reach out if you would like to invest in real estate!