Top things to look for when seeing a potential investment?

[Matt Haddix]

I’m new to the site and am going to start looking at some properties soon. I was wondering what things you make sure to look at/for when viewing a potential investment property?

[Brian Formulak]

For us, we primarily focus on cash flow cap rates. All of our properties need to be in an area where the average rents align with the cost of the property, rehab costs, annual expenses, as well as long term capex (bigger ticket items such as HVAC). After calculating all of our costs, we won’t even pursue a property that we don’t believe can drive a minimum 10% annual cap rate. Keep the 10% cap rate (annual investment return) in mind throughout your analysis, and make sure you stick to your numbers and do not invest unless the numbers work for you.