My first deal, will hopefully be a good one.

My first deal, will hopefully be a good one.

Berlin, Germany · Member since 2018 · 15 posts · 3 votes

Hey Everyone,

I've been investing for years but in stocks and now I'm also trying to add real estate to that. I've watched and read several things to try and get a very general picture of what I should be looking for. I've found a few places in Ohio I'm interested in buying but I lack the knowledge I feel to pull the trigger. I see some of these offers and can't for the life of me figure out why someone would want to sell the property. Most of the properties I look at are generating nice revenue, so why pass on a good revenue engine? My other glaring problem is I still don't know if what I'm looking at is a good deal or not, I crunch numbers all day and still don't know. Any suggestions or words of wisdom for someone like myself? I know I want to build a portfolio of buildings that generate stable revenue over a long period of time. I mainly want to use this money to expand my property portfolio or my stock portfolio. 

What tools do you use to validate purchasing a property?

How do you know this is a good long-term investment?

Do you show others your future purchases to double check your assumptions?

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  • Specialist · Milford, ME · Member since 2016 · 630 posts · 378 votes
    7y

    If the numbers are accurate and you know what your investment perimeters are then it is just a matter of analyzing the neighborhood and the larger area in general. If you don’t know the area then pick up a couple books on long distance investing available on BP. You may want to find a partner located in the particular area where you are looking. There are many reasons why someone sells a property that makes good money. I have sold many.

    Question 1. - calculator, visual inspection and knowledge of the area.

    Question 2. - positive cash flow, positive trends in the area like population growth, area revitalization, economic stability (not just one employer)

    Question 3. - if you are new, it is a good idea. After you have done several you will know. 

  • Berlin, Germany · Member since 2018 · 15 posts · 3 votes
    7y

    Thank you for your words of wisdom. I'm currently in Berlin, Germany and will probably remain for the foreseeable future. My business partner is in D.C., but we are both Ohio natives. I will continue to read and try to ask less questions. 

  • Pleasanton, CA · Member since 2016 · 73 posts · 48 votes
    7y

    Hey Mason, a lot of the numbers are pro forma and once you dive deep in a deal you'll notice the cash flow decrease. Initially I could be making nearly 1k cash flow but after verifying the numbers that would shrink. For me making a few hundred in cash flow isnt worth the headache of OOS investment. 

    You might be running the numbers right but a lot of times they play with cap rates and rental income to paint a pretty picture. Making sure the projections are accurate is key. 

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