How to Pick the Right Investment Property

Posted by Bobby Montagne on Oct 20, 2016

Whether it’s today’s Wayne Brady version or the classics with Monty Hall – wide lapels and skinny microphone in tow – Let’s Make a Deal is a game show that we can all relate to.

So in that spirit, Walnut Street Finance introduces Let’s Make a Deal: The Fix and Flip Hard Money Version. Cue the music and bring out Jamie Farr and Nipsey Russell!

Imagine you, the investor/developer, have two real estate investment choices but enough financing resources for only one. Will you keep the presumably safer option that you have under your control or exchange it for the riskier, but perhaps more profitable, opportunity? Be careful, you don’t want to get zonked.

How to Pick the Right Investment Property | Walnut Street Finance

How to pick the right investment property? How do you decide which real estate deal to move forward with?  Here are some factors to consider before financing the real estate investment:

 

  • Potential profitability. Look hard at the real estate comps! Market conditions, buyer demand and school quality are just a few key statistics to hone in on for each property.  When deciding between property types, is one product easier to sell than the other?
  • Problems with Title. Does one of the real estate investment properties have complicated title issues or boundary disputes?

  • Location! Purchasing in an up-and-coming neighborhood might score you a good deal, but make sure there is enough buying demand for a quick sell. A stagnant listing drains profits very quickly.

  • Zoning. Is zoning an underlying issue with one of your real estate investment choices? Construction can’t take place on your property until the zoning issues are resolved, which can take months.  

  • Renovation risks. Does one property require a simple rehab while the other entails moving walls and adding square footage? Although more renovation tends to equal higher profit, it can also open a can of worms and lead to unexpected costs.

  • Convenience. You’ll be visiting your real estate investment property several times a week and dozens of times over the course of construction, so your project evaluation should factor in distance, time and convenience. Distance and time adds up quickly, and you may be better off spending those extra hours overseeing a job site than sitting on the beltway.

  • Branding. Which property is better for your business in the long run? Every completed real estate investment project becomes a living business card and a reflection of your business acumen. Your real estate investment portfolio should qualify you even before you reach out to your hard money lender to finance your next deal.

Bottom line: two properties may seem like equally great deals on the surface, but by considering some or all of these factors, you typically can make the better (and more profitable) choice.

So, Let’s Make a Deal! If you need a hard money lender for your next project or are just looking for a bit of real estate investment advice, contact us today!

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Bobby Montagne

Author

Bobby Montagne is a real estate entrepreneur with three decades of experience in commercial and residential property development, finance and sales. Having successfully overseen $15 billion in career transactions, he is among an elite class of real estate innovator that has consistently delivered high quality returns to partners and investors.