Updated: Feb 17
There are plenty of overwhelming moments one must go through, especially as an "innocent first-time investor" begins the daunting task of finding an investment deal.
For most, the struggle begins with 3 different hurdles:
The ability to vet a deal
Deciding whether it’ll give a good return or bad
Gauging the level of risk involved
Today I want to give you a starting point to help you overcome these common pitfalls.
What even is a good return?
It really depends. All deals are different and It’s important to look at each opportunity individually and break it down to its numbers.
Be sure to compare the real estate you're looking at to similar properties in the area. This is where using an agent comes in handy. Most agents have mastered the art of using comparables to determine a good listing price for a house… and to no surprise, these same tactics apply to analyzing an investment property. Analyzing a deal can be frustrating and overwhelming, so why not leverage someone who does this professionally? At the very least, for a second opinion.
Our team here at FIG hold licenses in Texas, Idaho, Utah, and Arizona. If you're looking at a deal in one of these states (or others) we'd be happy to help you out.
What numbers should you look at?
Whether you’re wanting to buy for appreciation, or for long-term rental income (or both), due diligence is the big 'risk-eliminating' factor. When a deal makes sense in its numbers, it almost always works out in reality.
If you've been pitched an investment property in the past, you're all too familiar with that feeling of getting lost in a proforma's numbers and stats. What stats are most important? What should I care the most about?
Keep an eye out for our posts coming up. We're planning on doing a short 10-20 minute webinar in the next couple weeks that's going to break down a proforma and what each of the numbers mean for an investment deal.
We've done a longer one in the past—if you'd like to watch that I'll attach it here:
In the meantime, if you’re looking for a breakdown of basic terms/strategies, I recommend heading over to our contact page and letting anyone on our team know (fig.us/consult) You can also watch our more recent webinars over on fig.us/webinars!