What Questions To Consider When Analyzing a Real Estate Investment
The decision of whether or not to purchase a piece of property is no small deal, and no small undertaking. It is an important choice that should not be taken lightly, and in-depth analysis can help to ensure that the right property is being invested in. When it comes to deciding on whether or not to purchase a real estate investment property there are a significant number of things to consider, pros and cons to weigh, information to analyze and important questions to ask. The following list of questions is a great resource to refer to when analyzing a real estate investment.
Key Questions In REI
Deal
Is this a short-term, medium or long-term opportunity?
Is there equity built into the deal?
Is there cash flow in the deal?
Are there multiple exit strategies that come with this deal?
What is my unfair advantage with this deal?
How fast can this deal be done?
What are some of the factors that can slow this deal down?
How much effort, resources and time is required on our part?
How much capital is needed for this deal?
How can we get more creative with this deal and make it more valuable?
What are some external threats that can compromise this deal?
How safe is this deal and can it be sold quickly?
Property
Is there excess land we can subdivide?
Can you change the floor plan to increase profits and value?
Can we change the number of bedrooms and washrooms to make the deal sell faster?
Will the property benefit from adding a deck?
Will the property benefit from finishing the basement?
Do we have inside information on the area that has new developments, schools, transportation being built that others don't have?
How can we create more profits?
What is the highest comparable property in the area?
Is this a desirable area?
Is the price further negotiable?
Can this property be rezoned for profit? (e.g. commercial to residential)
The questions above have been divided into two groups, one section contains questions that relate more specifically to the deal, whereas the second list contains questions relating to the physical property and surrounding area. This is an easy way to divide up your questions, points, notes and information for easy understanding and access later on. By asking these simple questions you will be able to glean a lot more information about a real estate investment opportunity and whether or not the property is a worthy investment for your portfolio.
Some information sourced from Money People Deal by Stefan Aarnio.
For more information, fast facts, tips and tricks to help you through your REI journey check out CADMEN Properties.