How to Choose Good Investment Properties

good investment properties

What Makes a Good Investment Property?

Whether a beginner in real estate investing or an experienced pro looking to improve their skills, when learning how to choose good investment properties there are a number of factors to consider.  A few key factors in how to choose good investment properties are:

Considering Your Financial Goals

When starting to think about how to choose good investment properties, the first step is to take a hard look at your personal financial situation.  This isn't just about whether you have the money or not, it's also a good conversation with an expert about what your real estate investing goals are.  Good investment properties for one investor might not be a good fit for another since different property types provide different returns.

Some investors look for immediate cash flow.  Other investors look for high appreciation rates or properties in developing locations.  There are numerous real estate investment strategies, and they all have merit.  That's why first we want to determine what your goals are as well as your risk tolerance before recommending what type of property is a good fit.

For working with investors, it makes sense that one of our owners is a realtor, the other an accountant.  When trying to make sure your money is going to work well for you it takes more than just a knowledge of real estate.  Taking advantage of tax mitigation strategies, grants, tax credits, and other similar items are critical to making your investment make sense.

Where You Invest Matters

Location is important for a number of reasons.  In-demand locations mean it will be easier to rent or sell your home.  Regardless of if you're flipping a house or buying a long-term rental, picking the right location is critical.

The most in-demand locations aren't always the best, though.  Sometimes areas are so highly sought after that their prices are inflated.  There are also up-and-coming areas to consider where the demand hasn't quite caught up to the potential.

Working with an experienced realtor familiar with the local area helps ensure you buy in the right location.  A skilled realtor can do the legwork for you in finding the right spot to buy, or you can dig in and learn about it yourself.  However, do-it-yourself real estate investing is on the rise, and a number of these investors manage fantastic returns.

It Has to Be Profitable

Of all the factors to consider, at the end of the day, when considering how to choose good investment properties, it just has to make money.  This means it's important to keep money on the mind and not buy properties based on personal preference.  Your preference may not be what most likely provides a good return on your investment.

What Types of Investment Strategies are There?

Typically, residential real estate investors are focusing on one of four goals (or a combination thereof) when trying to find good investment properties.  These goals are:

  • Cash-flow positive properties
  • Big equity build
  • Quick flip potential
  • Tax deductions

There are other goals an investor can have, such as finding an income-producing property they can also use sometimes for personal pleasure, but these four are the main considerations real estate investors have.

Which Strategy is Best to Maximize Good Investment Properties?

There is no one 'best' focus for finding good investment properties.  For some investors, the type of property that may best produce positive cash flow will lack any substantial long-term potential for appreciation, meaning no big sale years later.  Other investors can't or don't want to afford to wait for a big payout later and need something that will immediately begin producing income.  It really depends on your financial goals.

It is important to work with the right experts who can help you figure out what works best for you.  With Southern Bay Realty, you get to work with seasoned investors who are both realtors and accountants.  This combination of expertise makes our team well-suited for any residential real estate investor looking for a solid property to sink their money into.

Want to Talk About Investing?

Our experts offer free consultations.  So don't delay, call now to schedule a meeting today!

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