I've Found a Potential Investment: Do I Wait or Do I Jump?
This is the first question every new real estate investor asks when they find their first potential investment.
• Do I wait to make an offer?
• Is it too risky?
• Should I wait until the pandemic is over? (ok, not always, but right now, the pandemic is a factor)
What are the metrics and goals you want to reach as a real estate investor?
When you invest in real estate, you put your money in a real, tangible asset, which makes your investment less risky than some other investments you might consider.
If you find a potential investment property, do you wait or do you leap?
Do the Math to Determine Cash Flow
If a realtor is listing the property for sale, the listing information should include current rent per unit – If not, contact the realtor for those numbers. You'll also need to know if utilities are separately metered so that you can have the tenants billed directly.
Consider the local economy
There are too many variables to count, but an investor should always consider the local economy's diversity. What types of industries employ the most workers? If possible, look for an area with 3 or 4 main industries, so if one employer or industry gets hit harder, your tenants will still have employment opportunities.
Do I wait to make an offer?
Timing depends on your position as an investor. If you have the cash reserves, qualify for financing, and the property meets your cash flow criteria, make the offer. There is no better time to invest in real estate than today.
Is real estate investing too risky?
Consider your own tolerance for risk, and weigh the additional benefits of owning an investment property.
If the purchase meets all of your criteria, move ahead with confidence. If the numbers don’t quite add up, there is no harm in waiting – another deal will come around, or you can go out and find one when you are ready to take the plunge.