Setting your investment criteria

Entering your real estate investing adventure with clarity helps ensure YOUR needs are met and YOUR goals are accomplished. You’ll want to have answers to these questions before purchasing an investment property.

QUESTIONS TO ASK YOURSELF

• How much money do I have to invest in the acquisition? (Sales price + any repairs + any holding costs)

• What is the minimum cash flow I need to see from this monthly (or annually) to make the investment worth it to me?

• What is the minimum ROI (return on investment) that I’m willing to engage with?

• How am I going to calculate the ROI?

• What are my exit strategies?

• What sort of cash on cash return am I planning on?

• What sort of cap rates are expected in the market I’m looking to purchase in? What sort of cap rate am I aiming for?

• What sort of tenants do I want to attract? What do I want my relationship with the tenants to look like?

• What is my risk tolerance?

• What locations am I most interested in? What locations can I most afford? Am I willing to compromise?

• Will I use a property manager?

• What’s the plan for repairs? Who gets called? Who does the work? Where is the money coming from to pay for it?

• How will I know when I’m looking at a ‘good deal’?

• What are vacancy rates in the areas I’m looking? How am I accounting for that?

• How long do I plan to hold this property?

• What’s the end game? What size portfolio would I like to have? What sort of annual income would I like to see from my real estate investments?

• Do I have someone to help me take advantage of the tax benefits associated with owning real estate?