Being able to easily look at and analyze a home or apartment building to determine if it’s a good investment takes practice and is dependent on your real estate investing goals. I personally am a long term real estate investor and am in for the slow and steady appreciation and of course the monthly income from rents. Someone who is investing in real estate hoping to flip a property will undoubtedly have to consider the following items as well but the implications would be short lived.
First thing to consider is how much money you will need to put up and for how long. If you have an in with a private money lender this won’t be as big of a deal. If you are trying to come up with the money from your own savings and investments this can bring your investing power to a screeching halt.
Impending repair needs
If the house is going to need significant repairs in the new future those costs absolutely need to be calculated into the cost of the home. Replacing a roof, new paint, remodels and repairs all add up fast. Looking into the future at these expenses is very important.
If the rent payment is not going to cover the mortgage + insurance + taxes + association dues (if applicable) then it is flat out not a good investment. Buying property on the hunch that values will increase and the opportunity to refinance will be there is not a solid plan to bank on and I do unfortunately know this first hand. I purchased a home, granted it was a home to live in, but I was under the false hope that the market would keep going up and that i could pull out equity and purchase another home as an investment or to move into. When the market crashed it became apparent that we were experiencing a bubble and bubbles pop.
Buying a property in the right place is almost as important as buying real estate at the right time. Taking the time to get familiar with the neighborhoods in which you plan on purchasing property is essential. Looking into the future of the area with the city planning department is also a good idea. If there are plans in the works to put in a waste water treatment plant or build a huge building blocking the views then it may not be a good idea to purchase that particular property.
With all that said there are of course more things to consider but those are a few of the most important factors on determining if a property will make a good investment property or if it’s better to move on and keep looking. Good luck with all of your real estate endeavors and I would love to hear back from you if I’ve missed a critical piece to analyze.