4 Key Considerations for Buying Smaller Investment Properties!

Smaller investment properties often offer significant financial/economic benefits, in terms of creating a mix of asset growth, investment return, and some degree of security! However, this is true, only if, firstly, the buyer fully understands what he is striving for, and why! Different potential characteristics, varying, potentials, for optimal performance, etc.! While, not everyone can, consistently, be interested in, afford, or participate in major real estate deals/purchases, they are able to cash in on smaller properties, etc. Four, family/unit, homes, and while some, make attractive investments, others, may not, always! With that in mind, this article will attempt, briefly, to consider, examine, review, and discuss, 4 important, meaningful, and essential/essential considerations and assessments.

1. financial flow: Cash flow, when it comes to these matters, usually, refers to the difference, between the money/revenue, received and the monthly costs. It is important to consider these, in a conservative way, by basing valuations, not on the highest possible rental rates, but through market-based rentals, and no more than 75% occupancy (to avoid, possibly, a cash-crush, if there is any interruption , due to a variety of possibilities / emergencies). In addition, the investor must be careful to ensure that his personal cash flow is not affected, by using a very high percentage of his reserves, for upfront costs, as well as building up reserves, etc!

2. Region / Neighborhood / Local Market: Ahead, take a leap, study and evaluate local real estate market conditions, and discover the market for rents in terms of availability, demand, advantages, and/or disadvantages! Get to know the specific area well, and determine, if it offers, your best-case scenario, your priorities and your goals!

3. The 6% rule: Many pay close attention to what is often referred to as the 6% rule, when it comes to buying smaller investment properties. This means that three-quarters of the real-life rental listing must generate, at least, six percent of the profit. Expenses, should include: Mortgage-related expenses, including principal, interest, taxes, and escrow. owner – paid utilities; repairs. renewals. Promotions, reserves, etc.

4. property status: Understand, the current state, of the subject characteristic, and what needs to be addressed, immediately, on an intermediate basis, and in the long run. Reserve funds should be used, prepared, for as many contingencies as possible, as expected, etc.! On the other hand, do not be overly affected by the gradual, overestimated, rents!

More than 15 years later, as a licensed real estate salesperson in New York State, I strongly believe in the potential and advantages of investing in smaller investment properties, but only when done, carefully and in a focused manner! The smarter you get, the better!

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