Criteria for my Criteria?

Question

• Examples? You only want to work with single family fix n flip properties with max ARVs of 200K with rehab budgets no more than 35K. why?orYou only want multifamily rentals that will generate you and income of 300/door/mo
• You only want to work with single family fix n flip properties with max ARVs of 200K with rehab budgets no more than 35K. why?or
• You only want multifamily rentals that will generate you and income of 300/door/mo

Yep, that's my question. Criteria for my Criteria? Like many things and perhaps like many people, I tend to make things more complicated than they really are...and this may be just one of those cases. But seriously.

How do you define your investment criteria? What are the reasons you set your criteria that way?

• Examples? You only want to work with single family fix n flip properties with max ARVs of 200K with rehab budgets no more than 35K. why?orYou only want multifamily rentals that will generate you and income of 300/door/mo
• You only want to work with single family fix n flip properties with max ARVs of 200K with rehab budgets no more than 35K. why?or
• You only want multifamily rentals that will generate you and income of 300/door/mo

• You only want to work with single family fix n flip properties with max ARVs of 200K with rehab budgets no more than 35K. why?or
• You only want multifamily rentals that will generate you and income of 300/door/mo

or

These aren't my criteria. Just trying to figure out how one determines theirs.

All thoughts welcome...thanks!

Trevor Ewen · Answer

@Frank Matanane

I think it's a good question. I think the most self-aware investors would likely admit that some of it is purely accidental. Getting started means taking a few small leaps of faith. Even the most well-read have some missteps. With the missteps you learn a lot about what works and what doesn't in a market.

Some of it, of course, is just based on logic, reason, and self-control. For instance, the statement "I want the mortgage covered by the tenant" is regular wisdom I applied before ever doing a deal.

Still other parts are based on your theories about the world, your area, and tenants. I think this is where a lot of ideas about appreciation come into play. I, for one, believe that most large metro areas are over-priced and many medium metro areas are under-priced. Furthermore, I believe there will be a demographic shift out of the expensive larger cities as more family-unit households are formed. This criteria aims my market selection.

That's probably the most wishy-washy answer you could get. I think the important exercise is to sit down and identify the accidental, logical, and theoretical aspects of your criteria. If you could put them all on paper, would you be comfortable with that criteria?