What Makes a Great Real Estate Investment

If you are planning to delve into the realm of real estate investing, you will want to learn how to earn the most money possible while minimizing the amount of time you must spend actually attending to any real estate property you purchase. This means you need to make some very smart choices from the get go.

Here are some tips that can help you find those great real estate investments:

Look at the Cash-on-Cash Return

When you are purchasing real estate, you take money from your liquid financial assets and invest that money into ‘illiquid’ assets (real estate). Since you were already earning a rate of return on your financial assets, you should make sure that you are earning a fair cash-on-return when it comes to the real estate you’ve invested in. This means that you should buy only ‘cash flow positive’ properties, ones that will give you decent returns.

Look at Risks

While all real estate is a risk, you want to make sure you aren’t investing in anything too risky. Things like fixer uppers, TIC investments (tenant in common) and private real estate funds are all very high risk, compared to purchasing an established cash flow property. When the property is too risky, you may never see a penny of your money again.

One way to minimize these risks is to take a ‘fee simple title’ in your own name on the properties you purchase. You should also do your research on every property you are considering in order to lower your risks.

Look for ‘Low Maintenance’ Properties

You want to find properties that will not require too much time management on your part. Some properties just require way too much time and management to make them good investments. Steer clear of vacation rentals or properties that are in bad areas or are college rentals. You want a nice, boring property that you can rent for a long time to tenants with good credit profiles. These will not require much of your time; you also want to make sure you are treating those good tenants with respect, so that you can keep them. This will reduce hassles in the long run, and with real estate investing, the fewer hassles, the better!