Financial Planning

Planning how the investment will be financed is the first step in real estate investing because it helps outline the search criteria/metrics. Do you have the finances to afford a commercial property (5+ unit & commercial property types) or a residential property (1-4 units specific to housing)? Do you need to add a partner in order to finance the deal? All of these questions are best to know before finding the perfect property to invest in.

Knowing Your Market

Every investor has different criteria for what they are looking for in a potential investment property. However, the search criteria needs to match the location one is looking to invest in. For example, an experienced investor may say they will not pay more than $80k per unit. The cost of one unit will vary heavily by the location of the different units and if the different investment properties are in different school districts.

Identifying a rule/criteria to search

Not the last step, but the most important step is setting up criteria or a rule before signing an agreement of sale. There is a multitude of rules or criteria to look for in an investment property. There is the 1% rule, the cost-per-unit approach, house hacking, and many other rules of real estate investment. Having a rule/criteria in place prior to signing a contract is the best way to evaluate if a property is worth investing in for you.