The expression “finding a needle in the haystack” is similar to today’s investors finding the best real estate investments online. Today there are so many ho-hum real estate investments disguised as good investments, how can you be sure you have a good one?
Actually, finding a decent investment is not as terribly hard as it is to find a great investment that has the ability to also be a good investment next month, next year and for years to come. This is where many of my investors get lost. I often see too many people rely on the pro-forma of a property as their sole diligence in evaluating a property. If this is what you do, you will not have such a problem finding properties. In fact most “Any City USA” today will have a property that looks good on paper. Pro-forma’s will illustrate great cash flow and illustrate good rates of returns.
Don’t judge the book by its cover
Let’s face it, anyone can make anything look good on paper. When buying an investment you are purchasing much more than a piece of real estate. Do not think just because the property passes inspection and proves to be a good sound property that it is a long term sustainable investment. The property can be the Rolls Royce or Mercedes Benz of property and still prove to be an unreliable investment for income. For example, you do not want to buy a nice shiny Rolls Royce or Mercedes Benz that has a worn out or weak engine. This vehicle will prove to be unreliable for transportation.
Similarly an investment property can also be unreliable as a vehicle to transport your investment portfolio forward. A property that looks great and is a good structure needs to also have a reliable engine.
The engine that drives your real estate investments
This engine that drives your investment has many moving parts just like the engine that drives your car. All components must work together in perfect harmony for the engine to run smoothly and provide long time reliability income. Remember a property is just a property. When the property has a great engine the property becomes a long term sustainable investment property that will give you many great years of income.
Let’s take a look at some of the components that makes up this investment engine
Job Growth: an investment property located in a market with good job growth will provide many more tenants that need housing.
Job diversity: a property located in a market with good job diversity will be able to weather the conditions of industry challenges that may cause job layoffs threatening your tenant’s sustainability of income.
Housing affordability: your property should be located in a market with high affordability. Housing cost should not exceed 1/3 of median income. When you invest in an area that only requires say 20% or less of your income (such as Atlanta, GA currently at 17%) you can be comforted in knowing the market has a lot of growth potential. The flip side, markets like New
York and Los Angles require upward of 40% and beyond for housing expense. It is very hard to depend on these markets providing sustainable growth in values or in tenant’s ability to pay rent.
Local governments 5, 10 or 20 year vision plans: when the property you invest in is in markets such as Oklahoma city, Philadelphia, Cleveland or a number of markets that have a city vision to grow and a number of systems in place to attract new jobs and new residences these markets typically advance forward at a predictable and safe growth.
Population growth. you want a property located where there is population growth. There are markets such as Detroit Michigan that has been suffering from population decline. Markets with shrinking populations tend to suffer from shrinking jobs and local economy in stability. The opposite is true when a market is highly sought after and people are moving in, giving plenty of tenants to choose from and a more sustainable local economy.
These are just some examples of components that make up a great investment engine. You can see how each of these work together to provide a long term sustainable income ride. The more components that make up a long term sustainable investment the better your investment will be.
You can see that you are able to buy a property that on paper may provide you with cash flow. (a nice property with a weak engine) Finding a property that works as efficiently as possible represents the bigger and more important aspect to be looking for. I believe what you really want is the ability to get that cash flow and equity growth today, tomorrow, next year and into the future.
If you never gain clarity, you never move forward. If you do not invest in the right property with the correct technique, you miss the massive wave of opportunity. You then grow older stating those dreadful words, “I wish I would have invested in this or invested in that back in 2012 and 2013 when the market was hot!” 10 years from now when the history books are written on these successes, you will read them and realize you missed your chance.
A forward thinking newsletter that looks to the future (forward – a dashboard report). All too often people look in the past (rear view mirror) tracking everything that has happened in the past to make predictions on the future. Go ahead and try to drive a car forward by looking into the rear view mirror. You may move forward but the speed is going to be much slower, you will weave all over the road due to lack of clarity, and you will run into many obstacles because you were unable to see them coming.
As a real estate investor you want better odds. You want a dashboard perspective, a dashboard that can look at the latest trends such as turnkey investing, real estate notes, tax deed investing, second home investing. Most importantly, where the best locations are to accomplish these specific goals.
Real Estate Investors Dashboard
The US is the most sought after economy in the world today. For simple reasons. We have the best innovation of any country. We track the fundamentals of success and adjust to stay ahead of the game better than any other country. That is exactly what the EBG Dashboard Report does. It monitors markets with real time, current, up to date information on real estate emerging markets and investment trends. We track the fundamentals of investments to bring you current information and techniques that can help you capitalize today in a way that will coincide with different investment objectives.