What is the most important factor for your success in real estate investing? To find the best real estate investments, of course. However, this might not be as easy as it sounds because there are so many options when it comes to real estate investments that we encounter every day. While some of them are meant to bring real estate investors lots and lots of money and make them rich, others are just straightforward failures which risk leading an investor to bankruptcy. Thus, you should be very, very careful to choose the best real estate investments. But how do you do that? And where do you find them? Let’s look for the answers to these important real estate questions below:
How Do You Make the Best Real Estate Investments?
First of all, it is not so much about finding the best real estate investments as much as it is about making them. What does that mean? It simply means that you – the real estate investor – are the main factor which affects the profitability of your investments in real estate and thus determines how good or bad they are. To help you out in the process of making the best real estate investments, following is a list of the steps which you need to take on this road:
1. Choose your location carefully
Location is key in real estate investing. You’ve heard that a million times, and you will hear it another million if you belong to the world of real estate investing. The best real estate investments properties are placed in the best locations. Location will determine the supply of and demand for real estate properties; the supply of and demand for rentals; the available types of real estate properties; the most sought types of rental properties; property prices; rent prices; rental income; property tax; CoC return and cap rate; the optimal rental strategy; Airbnb legality; and others. So, the first step to buying and owning the best real estate investments is to make them all in strategic housing markets.
2. Perform real estate market analysis
Every real estate investor has to be an expert on real estate market analysis. That’s how you will be able to make the best real estate investments. Before you decide on a housing market and an investment property, you should do diligent research and analyze well all major indicators. This is how you will assure good rental income, positive cash flow, and strong long-term appreciation.
3. Conduct investment property analysis
Another skill which all real estate investors – at least the successful ones, those aspiring to make the best real estate investments – must acquire is conducting investment property analysis. That’s the only way to make sure that the rental property you are about to purchase will bring you the optimal return on investment and the highest profitability in terms of CoC return and cap rate.
4. Use a rental property calculator
An alternative to going through steps 2 and 3 above is to buy a rental property calculator. Actually, nowadays that’s a must for every real estate investor looking for the best real estate investments. An investment property calculator will not only provide you with the key numbers related to rental income, expenses associated with owning an income property, and measures of profitability, but also with financing options, the optimal rental strategy, comparisons with neighboring properties, etc. At least that’s what Mashvisor’s rental property calculator does. With this real estate investing tool, within a few minutes from the beginning of your search, you will be exposed to the best real estate investments properties in any particular city and neighborhood.
5. Finance correctly
The best real estate investments are only those which are financed in a way that will bring you most profitability without bankrupting you. This means that you have to choose the best financing method for your particular case – whether cash or mortgage. To do that, you have to analyze your finances carefully and budget properly.
6. Only go for positive cash flow
After you’ve done all the necessary analysis, preferably with the help of an investment property calculator, you will be able to obtain the expected cash flow from any rental property. If you aspire for the best real estate investments only, then you should never ever go for negative cash flow properties or such which break even. Said in another way, only invest in positive cash flow investment properties. That’s how you make sure to make money from your income property rather than lose from it.
7. Select your tenants meticulously
The tenant scanning process can be tiring and very time-consuming. However, it has to be done with the highest level of detail and care. After all, even if you purchase the rental property with the highest potential to generate profitability, it will be of no use if you don’t rent it out or if you rent it out to bad tenants. Bad tenants will cause so much damage that the rental income will not be able to cover for it. Or bad tenants will simply not pay rent. So, in order to make the best real estate investments, you need to have good tenants.
8. Consider professional property management
An investment property is useless if not managed adequately. Thus, when needed, you should think about the option of hiring professional property management. Although these services cost money, there is a good reason for this – they exceed the care that you can take of your income property on your own. So, to assure the best real estate investments for yourself, opt for the best property management.
9. Repair and maintain on time
After finding the best real estate investments properties, you have to do everything possible to maintain this status. Don’t let your rental property decay just because you don’t have the time or money to fix it on time. A rental property will not make money if it’s not in a good, rentable state.
Making the best real estate investments is definitely a process, not a single act, and the most important step on the way is finding and buying the right rental property. To do that, check out Mashvisor and all the real estate properties available on it. The investment property calculator will help you select the most profitable one for your next income property purchase.