Three Things That Make A Great Real Estate Investment

Dated: September 1 2016

Views: 71

Three Things That Make A Great Real Estate Investment

If you’re looking into real estate investments, you likely want to earn wealth on real estate based on risk you are taking, while minimizing the amount of time you need to spend attending to the property. In order to accomplish this, you need to make some smart choices upfront when buying investment property. Your goal should be to strive to get as close as possible on as many of these optimal scenarios as possible:

Pays a Fair Cash-on-Cash Return

When you buy property you are taking money out of your liquid financial assets – stocks, bonds, CDs – andinvestingit into a very illiquid asset – real estate. You were earning a rate of return on your financial assets, such as 4 percent or 6 percent, and you should strive to earn a fair cash-on-cash rate of return on your real estate. To do this, you need to pro forma your deals and buy cash flow-positive properties that earn you decent returns – not those prize properties that are negative, negative, negative. For more guidance on this, seeSmart Investing – A Tale of Two Townhomes.

Isn’t Too Risky an Investment

All real estate is extremely high risk. Development of real estate, land, Tenant-In-Common (TIC) investments, private real estate funds, fixer uppers, etc., all have much higher risk profiles than just simply buying a nice established cash flow investment property. In many of those investments, you will never see a dime of your money again because there are just so many things that can go wrong! So if you want to own real estate, consider simply takingfee simple titlein your own name – or an entity you wholly own – to the properties you purchase. In addition, you must do the proper due diligence, analyze, test, review reports, etc., to make a lower risk real estate decision.

Doesn’t Require a Lot of Time orManaging

Some properties just require way too much time and management to make them smart investments. Examples include vacation rentals, low quality properties in bad areas, college rentals, etc. Nice boring properties rented for as long as possible to decent credit profile tenants seem to take the least time to manage. In addition, treating your tenants fairly and with respect goes a long way towards keeping good relations with them; and reducing your hassles when there is an issue you need to address. And believe me — there will be issues!

Latest Blog Posts

Hometown Heroes Down Payment Assistance In Florida

I am so excited to tell you about a brand new program that was just approved by the Florida Legislature aimed to help our “Hometown Heroes” get into a home for the first time. Not only does this

Read More

Love To Learn Play And Live In LARGO

Have you heard of Largo, FL? Located Just inland from Indian Rocks Beach this little gem of a city often gets overlooked, but has so much to offer. A few minutes drive south of Clearwater

Read More

How To Turn Your Bathroom Into A Spa

Most bathrooms are just…bathrooms. They have a toilet, a shower (possibly with a bath), a sink, and a medicine cabinet filled with products you’ve definitely been meaning to sort through. Why

Read More

Dealing With Popcorn Ceilings

Popcorn is great with a movie or possibly for stringing around an old-fashioned Christmas tree, but it’s a little less universally loved when it’s applied to the ceiling as a texture. “Popcorn

Read More