When you start looking into buying real estate, the easiest place to look is somewhere that is geographically close to where you live or where your business is based. But as you’ll soon find, just because it is close to you doesn’t mean that it is the best property to invest in. Today, I want to give you a crash course in some things to consider when determining where you should start investing. No location is perfect, but there are some things to consider so that you can find a property that is right for you.
What Kind of Property
The first thing that you have to decide is what kind of property you are interested in exploring. Here at Magnolia Design Properties, we started with single family homes, and over the years, we have progressed into investing in exclusively multifamily properties that consist of at least 20 units up t0 100 units. This may seem like a huge undertaking, but there are so many kinds of multifamily real estate that fit every budget, timeline, and objective. Once you have decided what kind of property you are looking for, you can start looking at the big picture!
Big Picture Criteria
When it comes to the big picture, you need to consider three major things; economics, population, and the gross rent multiplier to price of the real estate purchase.
Economics : How many jobs are there in the city you are considering? Is unemployment increasing or decreasing in the market? What kinds of jobs are the people in your market holding? Are they working professionals? Are they primarily blue collar workers? Honing on in on economics will help you decide what kind of property you are going to purchase.
Population : Anytime you are looking to invest in real estate, a huge indication of success will be an increasing population. This will raise the demand for housing, therefore allowing you to ensure that you can find higher value properties and charge higher rents.
Gross Rent Multiplier (GRM): The GRM is a quick, alternative measure used by many real estate professionals to use annual rents rather than monthly rates. The GRM is the number of years the property would take to pay for itself in gross received rent. For example, if you have 500,000 sales price/50,000 in gross rental income, the GRM is 10. A 10 GRM calculated on annual rents suggests the gross rents will pay for the property in 10 years. Investors typically like a lower GRM because it represents a better opportunity.
Small Scale Priorities
The small scale priorities are important because they help you determine what kinds of people are going to rent your properties and they help you consider where you can improve upon an add value property. Some of the things to consider are walkability; is the community where you are looking to purchase property walkable. Is there easy access to public transportation? What is the crime rate in the area?How conveniently located is the property? Once you find out the answers to these questions, you will be able to more clearly decide if a location is best for you or not. If you’re looking to start investing in multifamily property in the Charlotte area, reach out to us through our contact form and let us know how we can help. We are constantly looking at value add properties to invest in and we are always looking for investors to partner with! We provide a turn key solution where we find and source the property, move it through the acquisition and management process and bring in qualified investors through a SEC legal process. We provide a hands off , wealth investment strategy for our investors.
