Going in blind and simply hoping for the best on your real estate investment typically doesn’t result in the desired outcome, profit. This is why it is vital to make sure you have the right pieces in place when searching for your rehab or rental property. Even more important is having the confidence that you have found a good deal...but how do you know that?
4 Ways to Know if Your Property Is a Good Deal
- Having the right team. A few weeks ago one of our blog posts was focused on the importance of building the right team, and it is essential to assemble the right people around you when it comes to making sure your investment is a good deal. When establishing goals at the onset of the project, look at the team you have put together and make sure everyone is a good fit and will help contribute to making those goals a reality. If you have any doubts, you may want to look into alternative options.
- Looking at similar property/area success. You should always do your research when it comes to real estate investing and that involves looking at similar transactions in the neighborhood and how they ended up. Whether you’re looking at a property to flip it or to keep it and rent it out, look at how other investors in the area have done with similar exit strategies. This will give you a very good idea of what to expect when your rehabilitation process is complete; occasionally a property may look like a great investment but the market in the area hinders you from making a profit.
- Ensuring your budget is accurate. The last thing you need to happen when rehabbing a property is to run out of funding for the necessary repairs. Make sure that the budget you have established for the property allows you to rehab the home to the level that you used to calculate your ARV, and it doesn’t hurt to factor in a little bit of “wiggle room” because we all know unexpected things pop up all the time.
- If you’re confident. If the voice inside your head is providing reasons for doubt about the deal then you may want to move onto something else. You should have a solid amount of confidence in your mind when it comes to the potential deal that you are trying to close and the expected return that you are calculating for it. Remember that nothing is guaranteed in this industry, especially your return on investment.
Having confidence that you have found a good deal with your property is an absolute necessity, but your investing journey cannot continue (or start) until you finally jump in and make it happen. By doing your due diligence and ensuring that the above points are met, you will be well on your way to helping yourself in future investment deals. Remember to make everything a learning experience!