Rental Property Investor · Dubuque IA / Janesville, WI · Member since 2019 · 44 posts · 17 votes
I'm curious to here what kind of analysis everyone does when they are scoping out an investment. Which equations do you use? And specifically what's your target with those? (Cashflow goal, ROI % you shoot for, IRR, etc.) Looking to provide some value to newer investors that may not know what a good investment is yet and they can get an idea of what everyone else's target goals are!
Lender · Nationwide · Member since 2018 · 571 posts · 310 votes
6y
Hi Logan, I think of any investment coming down to four factors: risk, return, liquidity and time or involvement. Different asset classes will offer different mixes of these: flipping has great returns but uses a lot of time, stocks have excellent liquidity and decent returns but are fairly risky, passive investing in multifamily syndications, which is what I do, has a great return on time and very good risk adjusted returns but very poor liquidity, whereas investments in new construction have phenomenal returns, and low involvement but are risky and illiquid. Each person will have different amounts of money, time, flexibility and risk tolerance that different types of investments can support. Personally, I value my time more than anything, so I focus on investments with high return and low active involvement.