More and more investors are adding real estate to their portfolio. Real estate provides a certain level of security over time and is a physical asset that doesn’t have to report quarterly earnings everyGDP Estimate Revised three months. Yet because real estate is not as liquid as say a publicly traded stock or a mutual fund, selecting the right real estate investment takes thorough research and planning. Especially for the first time investor, knowing the proper steps and reality-based thinking should form a plan of action. Buying a property and then figuring out how much you can make is backward-thinking. There is simply too much data available that can be ignored and investors can end up with the wrong investment.

 

When people look at real estate sometimes they consider it as a transactional decision. In other words, buy at a certain price and sell at another. But there’s much more to consider. When buying a property for the long term and watching the equity grow while cash flowing each month, it’s important to validate your assumptions. When investing in a condominium, it’s much easier to determine whether or not the property will cash flow and if you’re getting a good deal. Condos are very similar to one another in the same project with the same basic set of floor plans. Recorded sales data will tell you what properties are selling for and you can research what these units are renting for.

With a single family residence however, it will take a bit more digging. You should consider enlisting the services of a licensed appraiser who will dig up the numbers for you and provide you with a market rent survey. This survey will show what the home will likely rent for by comparing it to similar properties in the area. You can do this on your own but you really should leave it to the professional who does it on a daily basis. There is no substitute for data. The more you have, the more likely you’ll be pleased with your purchase.