Real Estate Investors
Adding to Your Real Estate Portfolio
As a realtor myself, investment real estate is perhaps one of my favorite services.
As an investor, you’re seeking a property that meets a set of criteria and goals worth your risk. Luckily, real estate provides various strategies and formulas that will limit that risk and are important for an investor-agent to realize and understand. Below are key considerations you should keep in mind:
- Listing price plays a minimal role; buy with equity in a home already based on the current market value and rental comps.
- Force a 10% appreciation during the first year: all properties have room for improvement. By decreasing expenses, increasing rents, and improving the property, rest assured the value of your property will increase by 10% in the first year.
- After Repair Value (ARV) & Loan To Value (LTV).
- The capitalization rate is the potential rate of return you’ll get on a real estate investment. Cap ratio = net operating income / current market value (sales price) of the asset.
- Plan for a monthly cash flow of at least $200/unit.
- Return On Investment (ROI) i.e. cash on return should be 10%, hopefully, 12% (stock market comparison), this excludes long-term value and tax benefits.
- The 70% rule for house flipping: the investor should pay 70 percent of the ARV of a property minus the cost of necessary repairs.
- Employment/population statistics in the area you’re looking to invest.
I provide a systematic process that caters to various investor types. Do you subscribe to the “fix and flip” investors’ understanding that timing is everything, from the moment your agent submits your offer to getting the property listed at the right price point after repairs? Or maybe you’re a “buy and hold” investor with the knowledge that location and rental cash flow is key to the success of your investment. Lastly, and my personal favorite, perhaps you’re a “hands-off angel investor” in search of select properties with healthy profit margins. This form of investing typically leads to the creation of an LLC and/or general or limited partnership agreements with agreed upon terms customized for a particular property.
Below is a quick questionnaire that will get us closer to taking action towards your next investment goal.
Quick tips and steps to take now:
- Based on your experience, read each article and visit the provided links.
- Get organized and take notes.
- Fill out the Investor Survey.
- Strongly consider a partnership.
- Contact me for bank lending referrals.
- Do your research. It’s the 21st-century; knowledge is power use technology. Great starting points for your research are YouTube, Google Search, and BiggerPockets.
Investor Going Forward Survey
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