To have a sustainable real estate investment you need the best possible property, within the best area of the best and most sustainable market that is positioned to create a long term, predictable returns. Over the past few I years, you should have been able to find a nice cash flowing property in most any city in the U.S. But not all of them are sustainable investments.
So what is a sustainable investment? I will get to the five things you need but first a quick review.
The sustainable returns of a real state investment should be one of the first pieces of diligence performed when buying investment property. In fact I believe it is the most over looked pieces of diligence. Case in point. Many investors went broke during the financial challenges of the past decade. They thought they bought right after doing the diligence on the property. They later learned about the quick shifting markets and lost their shirts. This could have been avoided if the diligence for sustainability was indeed considered. You want to always remember you are not simply investing in a property you are also investing in the local real estate market. You want to make sure first and for most that the real estate market you invest in is the best investment market capable of returning long term stability to match your objectives.
In real estate investing you should find a market that can support the basic necessities to create the sufficient funds. Here are the five things you must have to sustain your real estate investment over the long term.
- Job growth: creation of jobs that provide for long term economic progress
- Population growth. As populations grow so does housing demand
- Path of progress: when city expansion moves north for example so should your investment location
- Undervalued markets. When median home price is equal to or less than 1/3 the median income your market is positioned for stable growth
- Local city programs to attract t growth: provides longer term growth
This list could go on and on. The point is before evaluating a property for stability or cash flow, or capital growth, you want to evaluate the market’s ability to provide the necessities for long- term sustainable returns. Once you are satisfied of the market’s stability then you can proceed to finding the best property within the sweet spot of that market.
Do you agree with Larry? Disagree? Please leave you thoughts in the box down below where it says “Leave a Reply.” Thank you.