Investing Basics: How to Recognize Great Real Estate Opportunities

Written by Posted On Friday, 06 September 2019 03:11

Want to get better at real estate investing? It helps to know which opportunities to take advantage of. Here's how to spot great real estate opportunities.

The real estate industry builds wealth faster than other assets in the world. It is one of the ways through which you can make some substantial profit in no time. There are several real estate opportunities that you can invest in: all that matters is knowing the right one for you.

Whether you are new to the world of real estate or you have been in the game for quite some time, no one wants to lose their money. Investors are always on the lookout for the best real estate investment opportunities that are available in the market.

The big question here is; how can you recognize the best investment? Read on to find out what makes a good investment deal and how you can locate it.

How to Recognize Great Real Estate Opportunities

Finding a great real estate opportunity is one of the ways that you can be sure of getting a good and quick return on the investment. Every property owner wants the best deal when selling their property.

While the price of the property also matters, your ability to discern if the investment is worth it is very important and this takes a very keen eye. This homepage is an example of such an investment.

Here are some of the ways that you can use to know good real estate opportunities that you can put your money in.

1. Follow the Rule of Thumb

The general rule of the thumb or the 1% rule in real estate states that the income of the property that you want to invest in should rent for at least 1% of the purchase price. This will ensure that you yield some good cash flow.

This means, you have to know how much the rent the tenants are paying if any, or the going market rental rate for similar properties in the area so that you can know if the property will give you a good return.

2. Know the Class of the Property

Properties are ranked under different classes; class A, B, and C. Class A have the highest quality in the real estate market because they are mostly new and sell at a higher price. Class B is older but well-maintained properties and class C are a little older than class B, and they also require repairs and renovations.

The best investment is either class B or C because it will not limit you on the kind of tenants that you can have. In as much as such properties require little touch-ups here and there, you are sure to have tenants and this means instant pay off.

3. Know Your Potential Tenants

The potential tenants of the property that you want to invest in will help you know if you are making a good investment or not. For example, buying an apartment or housing units that are a walking distance from campus is a great investment.

Properties with ready tenants are always on demand and having a property that is close to campus means that you will not need to spend a lot of money on its upkeep since such students are not so picky about their housing. Any investment that does not require you to put much effort into it and can still give you money is a good investment to consider.

4. Recognize the Market and Submarkets

A good property to invest in should be located in areas that are susceptible to job opportunities, growth, and population. Check out the area for new malls, new establishments, new connecting roads, and highways.

Remember, when buying a property, you are thinking about the tenants and the resale value. This means properties near urban areas, restaurants, public transportation, and shopping centers are better to invest in than properties on the secluded and luxurious neighborhoods. This is not about what you like or what you prefer, it is business; therefore, you have to think about the property in terms of profits.

5. Foreclosed Properties Are Great Real Estate Properties

In as much as buying a foreclosed property means gaining from another person’s loss, they are good investments. Lenders and banks handling foreclosed properties are never interested in managing them or owing them.

Financial institutions are more interested in getting their money back. This means such properties are a great deal because they sell so fast. If the foreclosure meets all your investment needs, go for it.

6. Weigh the Purchase Price Versus the County Appraisal Value

Visit the county appraisal district website, put the address of the property and get to know its value as per the county’s assessment. If the selling price of the property is way below the county appraisal value, you can be sure that you will make some good profit from it. This is because the fair market value is determined by the county appraisal value plus some percentage over their assessment depending on the region.

7. Calculate the Cap Rate

The capitalization rate is calculated by dividing your annual net income minus any expenses by the price of the property you want to invest in. If the property gives you a 10% cap rate, then it is a good investment opportunity.

When it comes to investing in real estate, your ability to foresee opportunities and profits where others see problems is one of the things that will help you make good investments always.

Consider the Aforementioned Tips When Looking for the Best Real Estate Opportunities

There are a lot of properties that you can invest in, but knowing the best real estate opportunities will help you secure your money and also make some profit. Remember, never be in a hurry to invest. Take your time to go through the facts to ensure that you only buy the best.

If you are looking for a property to buy or just want to know more about real estate, keep browsing our website for listings and more information about the real estate world.

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pat ferguson

Pat Ferguson is a real estate agent and consultant, a writer at his blog as well as a senior editor here at usdailyupdate, where he maintains the across the pond feature

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