The Power is Now

How to avoid bad deals on income properties

Homeownership Program

An investment in real estate is a great way to make money in 2021.

It is not the kind of investment that you expect money right away, but over time, it will be worth it.

It is the backbone of the American Dream, and the cornerstone of wealth building in America, but without proper structures in place, this investment could drag you down. I have seen people buying and holding real estate only for them to be disappointed in the end. It doesn’t mean that their investment was wrong, it means that they never took their time to first understand the market, understand the metrics before investing.

You have to understand that some deals will work in your favor, and some won’t, it’s just the way the market works, but I am here to help you avoid investing in bad deals.

Know your Structures

Let’s talk about structures for a moment. Structures are boring, no one ever wants to talk about proper structures, and yes, you don’t want to invest your time figuring out what structures would work best for your investment.

There are numerous ways that you could structure your deal. The only limitation would be your creativity. There’s an old adage I love which says, ‘when life gives you lemons, make lemonade.’ certainly, not every structure will work for you, and there are so many ways to structure your investment deals, but it is important to structure it in a way that would work for you.

While all other aspects of the deal-making process are equally important, I think paying more attention to structures will determine the overall success of your real estate business.

Buying the right way will amount to positive cash flows and eventually equity growth. The keyword here is buying the right way.

Before going into the trade, do market analysis

Market analysis is key to the success of your business. By now I am quite sure you know that the real estate market is a dynamic universe and doing a thorough analysis will give you a good idea o what you can expect from your investment.

By doing prior market analysis, will give you a good idea of your target income based on the characteristics and the performance of the other properties around. This is important as you never want to go into any market blindly.

What about the property?

Sometimes I think investors are so obsessed with making a return on their investment that they forget about the property itself.

They focus on what’s happening around in the neighborhood that they forget to pay close attention to the property itself.

For any income property investment, it is important that you perform an investment property analysis where you will be able to determine the expected cash flows, your net operating income, the return on investment, the capitalization rate, and the cash on cash return.

If you are hearing this thing for the first time, it means that you are probably not serious about investing.

All these are the numbers that reveal the critical information about the profitability of your income property. For example, assuming that you do all your calculations right and your find that the income property is giving you negative cashflows, that wouldn’t be a worthy investment.

Let’s talk about location

Real estate is location. The location of your property determines how much you will fetch for the property in the end. It also determines the amount you are investing in your property, it will determine how much you will ask for the property, the long-term appreciation, and many other things. As such before investing, it is important to carefully do proper research on the potential locations and how the income properties in the area/neighborhood have been performing.

To sum it Up…

Doing it right is the key, when you buy an income property after doing proper market research, invested well in your investment, and set up the right structures, you can be sure to bag a good amount of money each month. Maybe you would like to chat more about the structures and market analysis, talk to Johnnie Morine TMGRone of the VIP agents with the Power Is Now Media, today, or talk to Eric Lawrence Frazier MBA, the Founder, and CEO of The Power Is Now Media at 800-261-1634 ext. 703.

About the Power Is Now Media

The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, and is headquartered in Riverside, California. We are advocates for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities.  The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com

 

References
https://www.accesspmgroup.com/how-to-avoid-bad-real-estate-investment-deals/
https://www.adpen.com.au/blog/beware-bad-investment-property-guide/

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