Investment Property Analysis for Beginners
Sometimes a property doesn't look good on paper (or in person for that matter) and it works perfectly as an investment vehicle. Other times, you run the numbers and it looks safe, but you just can't seem to cash flow.
I wish I could package a perfect product that would work for every scenario, but they are all different. What works for me in my rental properties, may not work within your scheme of investing. If I could do that, I probably wouldn't be blogging here today.
Instead I recommend a simpler approach to investment real estate.
1) Clearly define your goals. - Are you looking to achieve long term wealth or quick money? Do you want to have an active hand in your investment? Are tax savings as important to you as cash at the end of each month?
2) Run the numbers and compare the results to your goals. - What my numbers look like and what yours will look like will be similar, but what we base our decisions on will probably be different. I am investing for the long term and cash on cash isn't as important as many investors. Don't get me wrong, I need to not go back wards every month. But, if I can clear $2 a month and have some great depreciation schedules, I might be interested.
3) Go for it. - If this is your first investment property purchase, just jump. You will never know until you try. As long as the numbers work for you, the rest will come together.
There are problems with renting properties that will definitely come into play. Believe me, I know. From trashed properties to no-paying tenants, there are tons of potential headaches. But, on the flip side, how much will that property be worth in 30 years? $500,000? That's better than any 401k I've ever heard of.
Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud
www.jasontangen.point2agent.com - A new website for you to see for St Cloud real estate
www.jasontangen.com - Tried and true. Search homes for sale, get foreclosures, and find out what your property is worth.
