Where Should You Invest?
Deciding on where to invest should always depend on both your short term and long term goals. Know what you want to accomplish upfront, as well as your exit strategy before buying any property, or investing in real estate related assets or activities. A good rule of thumb is; wherever you see new development or approved plans for future development is an indicator of an up and coming ‘hot spot’. Revitalization of any neighborhood, usually results in other investors participating in the growth of the area.
Construction of large commercial developments, street expansions or improvements such as the addition of side walks and installation of trees to enhance the existing landscape is also a clear indication of where you should invest if you want to experience a respectable return.
Types of Investment Properties
The most common type of investment property is residential. Most investors start out here, and eventually ‘venture’ into commercial. Residential consists of detached single family homes, town-homes or condos. Multi-family units such as duplexes, triplexes, and quadruplexes are also considered residential.
Any multi-family property with five plus units are labeled as commercial properties. Apartments, hotels or resorts, malls, retail stores, office buildings, medical offices, self storage facilities, parking garages, and banks are also examples that fall under this category.
Should You Rehab–Wholesale or Buy & Hold?
The idea of making a ‘lump sum’ of money in just ‘one go’ is attractive to any investor. However before you dive ‘head first’ into the property investing business, there are a few things that you should know.
When analyzing a property, your first thought should ALWAYS be your exit strategy. What are you going to do with it? Rehab, wholesale or ‘buy and hold?’ If you can have more than one exit strategy that’s ‘golden.’ The condition of the property should play a major factor on the strategy that you pursue.
If the property is a ‘fixer’, then you may opt to rehab it or ‘wholesale’ to another investor. First, determine the after repair value. How much can you sell it for once renovations are completed? Next; calculate the estimated cost of repairs; then subtract the repair cost from the after repair value. Based on the information gathered, you now know the maximum price you can pay for the property and still make a profit.
If the property is in pretty good condition or move in ready and you’re not able to turn a decent profit by reselling then you may want to consider a ‘buy and hold’ option. If your goal is a quick turnover with minimum hassles, then wholesaling may be the way to go. Run comparables for the property before ‘pitching your deal’ to other investors. If you want to be successful with this strategy ensure that there is sufficient value for the other investor (buyer) to make a profit as well.