The main reason most folks invest in real estate is for the returns, which include cash flow and appreciation of property.
Real estate is an asset that has the ability to produce monthly income and gain substantial profits on sale or refinance of the property.
A few things to consider when Choosing a property
If your property does not bring at least a 10% cap rate, it is time to look elsewhere.
To figure cap rate, you need to figure you Net Operating Income and divide that by the cost of the home, if you can’t get at least a 10% cap rate, I would suggest moving on to the next property.
Be aware that some cap rates may be extremely high, however it may be an area that is on the downward slide.
When choosing a property, the main factors you need to consider are neighbourhood, repairs needed, cost, returns, risks and opportunity to add value.
Make sure to do your research when choosing a property, just because a deal looks great on paper doesn’t mean it’s always a homerun – always dig deeper.
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