Working with a Realtor that understands this market is a tremendous resource for anyone contemplating becoming an investor. Experienced Realtors that are also investors bring a tremendous knowledge that only comes with lots of experience, research, and education.
Knowing what is a good deal or not should not be left up to chance. Is a $50,000 property a good deal, is a $100,000 property a good deal. The answer – it depends.
To help you recognize what is a good deal or not a number of factors should be taken into consideration:
1. Cash Flow
Will this property cash flow? What is the current rental market like? What is the vacancy situation like? How much money are you putting down and what is the interest rate? Is the subject property a house, duplex, four plex etc? All of these factors considered, ask yourself, “Will this provide income for me?” Also, ask the question, “How will this property cash flow compared to other potential properties?” For example, the $50,000 house that rents for $750 /month has a better income potential than a $100,000 duplex that rents for $1050 per month. A four- plex that costs $150,000 may bring in $2000 month in the same neighborhood. Which is a better investment?
How important is income to you? Do you have other income? Do you need more income now, or is future equity more important? There’s no right answer to these questions, but are all factors to consider when looking at a potential purchase.
The less cash you put down on each property, gives you more opportunity to purchase more properties. We are in one of the best buying opportunities for the savvy investor; however banks are no longer open to 100% loans, and are looking for 70-80 % Loan to Value ratio.
Are you buying the property at a huge discount (you better in this market- If you can’t get a deal pass? You should only be buying home runs. If you get great deal you will have instant equity. Equity can take a number of forms and depending on the situation.
•A property undervalued- could be a great deal
•A potential fixer upper — could be a great deal
•A rezoning opportunity — could be a great deal
•A poorly managed property — could be a great deal
•A foreclosure- could be a great deal
•A short sale –could be a great deal
There are many ways to create equity, but the easiest form is to buy an undervalued property.
Buying in the right neighborhoods (location, location, and location) should minimize the risk if you make a good decision. In today’s market it would not be uncommon to buy something 30-60% off what a property sold just a couple of years ago. Under normal situation the average rate of appreciation was 2-4 % yearly.
In conclusion, if you are comfortable saying an affirmative yes you are well on your way towards wealth building. How much are you willing to take on? What happens if your assumptions are not correct? Can you withstand the storm? Can you make the mortgage payment if you have a vacancy etc?
Lot’s to think about.
So now what? Here’s your first step: If you are interested in becoming an investor feel free to contact anyone of us on the Omaha Real Estate Investing Team for a confidential consultation: Prudential Ambassador Realtors Fred Tichauer, 402-679-3914 or Shawn Prouse, 402-955-9058, Luis De La Vega 306-1212, Kelly Kirk 680-4153 or Kevin Schaben and you will be happy that you did.
We consider ourselves to be one of the most experienced team in the Metro/Omaha area. With us you can count on: Excellence, Trust, Commitment, Honesty, Integrity, Leadership, Expertise, Practical Knowledge, Results and over 70 years experience as investors. Call us for a no obligation and confidential consultation. We are committed to helping you get started on the right track.
You can also check out our web site at http://omaharealestateinvesting.com
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