Beginner and seasoned investors alike should understand the market they are investing in is always changing and evolving. Here are a couple factors to consider before making the big purchase!
The Driving Factor
Understanding who is moving to this area and what is driving them to it, (and keeping them there) is very important! Some important factors to consider in your target market is job creation and diversification of industries. Making sure that the economy and job market is not solely relying on just one industry is important. If something happens to that one industry, jobs will be affected and therefore the real estate market would slow down significantly.
Do your research. Talk to contractors. Get a full understanding of the cost of labor and materials before jumping into your first investment property. Each market varies slightly in costs. It’s important to stay up to date on the fluctuating costs for your future project!
Age, Style and After Repair Value
This factor is specific to each area you are looking at investing in. If a home is in the historic district, you can bet you’re going to run into an overlay / city board review for plans, approvals and an adjusted timeline for all the above. These things must be taken into consideration when looking at an investment project.
Understand your After-Repair Value. Are you in a city where values can change per street? Are prices higher on one side of the freeway vs the other? Do your own due diligence, don’t take someone’s word on ARV without understand the market yourself. This can lead to paying way to much for a property with a much lower ARV.
We highly recommend writing your goals down, sharing them with other investors and gaining an understanding of the market conditions. Once you have evaluated all these factors, then it’s go time!