Have you invested in real estate? If not, why not? If so, what type of property did you look for in your first investment? Do you still look for those same property types? Do you prefer being “hands-on” or “hands-off” in your investments?
According to Dave Peniuk at RevNYou.com, the best checklist to use for buying your first real estate investment is found when you buy “Properties with a C.A.U.S.E!”
Dave and Julie have purchased many properties in Canada over the years and, through their experiences, have come up with a nifty way to qualify a residential property investment. Here’s what they came up with:
C – Convenient. The location should be conveniently located to retail shopping, grocery stores, good transportation (bus, rail, highways), recreation, and anything else that would appeal to starter families in the community where the property is situated.
Ask yourself, “Will I be able to get to work, to my child’s school, to the grocery store, to the mall, to the bar (a-hem), or to the day care in a timely, safe, and maybe even “pleasant” trip?
A – Attractive. Does the house you are considering to buy have excellent curb appeal? Would you be able to lease the property to a potential family of tenants? Would they be interested in purchasing this property from you in the near future?
The IDEAL residential investment is a property that you can buy today for ($$$) and sell tomorrow for ($$$, $$$) – double – or even ($$$, $$$, $$$) triple your money!
U – Under Market Value. The best investment in residential real estate is the one that offers you an immediate benefit; ergo, cash value in the form of equity. As a general rule, you should look for a property that is at least, or close to, ten percent below market value. Why? Because you could potentially sell it immediately and earn a small profit.
With price appreciation – through favorable market conditions – and mortgage “buy down” you will have a good head start to realizing a better ROI (return on investment.)
S – Starter Homes. The ideal home for new families, and empty-nesters, are 3/2 SFR’s (Single Family Residences) with 3 bedrooms and 2 bathrooms, preferably with a 2-car garage; look at the picture above! According to the 2010 U. S. Census, the state of Florida has over 18 million residents; housing units is estimated at almost 9 million, of which 7 million were occupied at the time of the census (2.4 million were occupied by renters.) That means approximately 28 % of Florida’s housing units are renters and the larger 72% are owners – people would much rather OWN than rent.
The ideal investment property will be a home you can sell to your tenant in the near future!
E – Economic Fundamentals. A savvy real estate investor will either (a) hire a real estate professional to advise him or her of potential investments or (b) have a good working knowledge of how to research and evaluate the economic indicators of a potential investment. In real estate appraising, we call this a “feasibility study” for potential properties and a “highest and best use” analysis for existing properties. You’ll want to consider the following conditions: geographic, demographic, and psychographic market analyses; population growth, job growth, vacancy rates, rent growth, and competition (new home supply vs demand).
If “All roads lead to Rome,” then you are “Good to Go” – as best prepared you can be, short of having a crystal ball! – Like me! – 😉
Now you know the “CAUSE” for buying Single Family residences and are better informed about potential residential real estate investing. For more information about the “CAUSE METHOD” watch Dave’s online video (below), or visit him and Julie Broad at http://www.revnyou.com
Thanks for visiting!
Jack
John W. Tanner, J.D., M.S. 