What are the most important factors you consider when evaluating potential investment

[David Hanson]

Would love to hear from other investors. All locations welcome. Looking to better understand if there is something specific that you post the most emphasis on? Is location the most important, is it the CASH on CASH return, the monthly cashflow, or is it the depreciation? 

Personally

When evaluating a potential investment property, I consider several key factors to ensure it aligns with my investment goals and offers a solid return on investment. These factors include:

1. #1 Location: The location of a property plays a crucial role in its investment potential. I look for properties in areas with strong economic growth, low crime rates, good school districts, proximity to amenities, and positive population trends. A desirable location often translates to higher demand and potential for appreciation.
2. #2 Market Analysis: Conducting a thorough market analysis helps me understand the local real estate market dynamics. I analyze historical and current market trends, supply and demand dynamics, rental rates, vacancy rates, and property appreciation rates. This analysis helps me gauge the potential for rental income and property value appreciation.
3. #5 Property Condition: Assessing the property's condition is vital. I consider both the property's present state and its potential after necessary repairs or renovations. Understanding the cost and feasibility of any required improvements allows me to estimate the overall investment costs accurately.
4. #3 Cash Flow and Cap Rate: I carefully evaluate the property's potential cash flow and cap rate. Cash flow is determined by considering factors such as rental income, expenses (including mortgage payments, property management fees, taxes, insurance, maintenance costs), and vacancy rates. The cap rate provides an indication of the property's income-producing potential relative to its purchase price.
5. #4 Financing Options: I explore various financing options available to me, considering factors such as interest rates, loan terms, down payment requirements, and the impact on cash flow. Understanding the financing options allows me to assess the feasibility and profitability of the investment.
6. #6 Exit Strategy: Having a clear exit strategy is crucial. I consider factors such as the potential for future appreciation, market conditions, and the property's potential for resale or refinancing. This ensures that I have a well-defined plan in place to optimize returns when the time comes to sell or refinance the property.

By thoroughly evaluating these factors and conducting due diligence, I can make informed investment decisions that mitigate risks and maximize the potential for long-term financial gains.

[Alan Asriants]

First I consider location, then structure (style of building - this is important in understanding the mechanicals, electrical, plumbing etc. - weird layouts and victorian homes converted into multi family can be a headache to deal with and can substantially increase your cap ex.), then I look at cash flow. Generally over 10% is good with minimal cash invested (just a down payment on a turnkey property or a value add where I can cash out a large chunk of my asset)