Top 5 things YOU are looking for in an investment property?

9 Replies

Hi all!

I'm doing a bit of research of RE Investing and wanted to get some feedback.

What are the top 5 things you are looking for in your investment property? Please clarify if you top 5 is a rental or a flip. Thank you all in advance!

Im looking into multi-family and commercial. My goal is cashflow and add value opportunity. For instance in a multi-family i am looking for property owned by and individual, that could benefit from new windows kitchens and bathroom upgrades. Where i can increase rents. In the socal area i also look for opportunity to do gap funding on flips. 

Originally posted by @Jonathan Wilks :

Im looking into multi-family and commercial. My goal is cashflow and add value opportunity. For instance in a multi-family i am looking for property owned by and individual, that could benefit from new windows kitchens and bathroom upgrades. Where i can increase rents. In the socal area i also look for opportunity to do gap funding on flips. 

Much appreciated Jonathan!  

We invest in Buy and Hold in duplexes and SFHs.

  • Location, Location, Location
  • Cash Flow - focus on 1.5% or better  My best right now is 2.75%.
  • Purchase Price - lower the better.   Solid properties with cosmetic needs not major renovation needs.
  • Since we manage all of our own properties, we require that they are all within 10 miles of our home.
  • Potential for Appreciation
  • cash flow and add value opportunity
  • Location and area that i like. 
  • undervalued property. 
  • look at rental rates and see if i can raze them. 
  • property condition.
  • reason for selling. 

Medium mogul logo web smallPeter MacKercher, Mogul Realty | [email protected] | 314.210.4414 | http://stlmogul.com | MO Agent # 2010004223

It depends on what I want to do with the property.

1) As everyone has said here - location is important. My exit strategy will be different depending on the location:

To find out what type of areas you have (if you don't know), you have to get the appreciation rate, crime rate, and information about school districts. This specially crucial for buy-and-holds. You should get info like the following:

2) I get information like COMPS, property taxes, repairs, market rents, etc.

3) I run my numbers - how much money will I make if I rehab and flip the property? How much is my cash-on-cash return if I rehab and rent the property? Below are examples:

CASHFLOW ANALYSIS:

REHAB PROFIT ANALYSIS:

BOTTOMLINE: if I will make money on a property based on the numbers in a way that is appropriate for the area, I will buy the property.

My top 5 for a rental:

1. (positive) cash flow

2. in a growing market

3. B grade properties and location or better (C+ okay in some markets)

4. excellent property management

5. property condition (no desire for rehabs)

Medium hipsterinvestment logo black300dpiAli Boone, Hipster Investments | [email protected] | 310‑957‑2101 | https://goo.gl/x52ZKJ | CA Agent # 01911993

Population increase, low crime rates, good schools, property mgmt, and, oh yeah... positive cash flow

[email protected] | NJ Agent # 0565737 - NRS REFERRAL SERVICES, LLC

For flips this is what I look for....... 

1.  Location there are certain counties/cities I won't invest in because of distance,  entrance prices or reputations.  Even in the county I invest in I don't go to run down parts or the Northern part because of distance. 

2. A spread of at least $125k for ARVs between $200k-350k and less than $50-55k in rehabs. It's not the 70% rule but it's my quick take on it and pretty much ends up being close to the same thing. At various ARVs I want a bit bigger spread but I have realtor commission which is icing on the cake if the spread is tighter. I used to give up my commission to secure deals but never again as it comes in handy on the buy and sell side. Anything more than $60k rehab I don't want to get into and anything outside the $200-350 ARV I don't want to be in.

3.  I hit on it on #2 but no rehab that's more than $60k.  If it's an outstanding deal that takes $70-80k and there's a $200k spread or something I do it but typically I want to do the 5-6 week rehabs that are standard and get in and out. 

4. Houses that are in subdivisions or cities.   The properties around me that are a bit more rural sit and aren't as desirable. 

5. Anything with major foundation issues and fire issues I stay away from.  Wells and septic tanks are deal breakers for me normally just because of the area I'm in they aren't desirable (goes back to the rural thing).  Also mostly houses built after 1950.  Not really into the old houses.   The ones I've done have had the most issues as far as budget is concerned. 

All the advice here has been great. One thing I would add and ask myself, can I sell this property if needed for my entry price. If the answer is no (i.e, C-D properties), then I need to be comfortable holding for 10-20 years. If the answer is yes, then you can think shorter term. I am a buy and hold, but always think about "what if I needed to sell?".

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