Rentals Don’t Have to Be Pretty to Make Money in Real Estate
When buying a house, a key requirement for a majority of buyers is the physical appearance of the home. Functionality is of course important, but I think it’s safe to say that most of us want to live in a home that is visually appealing. After all, you spend a lot of time there, especially during cold winter months. If you are looking to make money in real estate it’s a different story.
The mindset of a buyer for a personal residence is quite different from that of a buyer of an investment property. When looking for a profitable cash flowing property, beauty IS in the eye of the beholder, but not it the way you may think. For an investment property, the beauty is in its numbers. Understanding the numbers will help you make money in real estate.
If you have gone through our website’s “Projects” page you will see that Marc has bought some properties without even seeing them. Can you imagine buying a house that you would consider living in without laying eyes on it? If you use a buy and hold strategy and create passive income, then you shouldn’t really care how attractive it is. If it consistently produces income, and you are able to implement changes to further increase its value then you have a beauty of a property. That;’s how to make money in real estate.
When Marc and I initially review a potential property the first thing we do is run the numbers . We look to see that, if after the debt service, there is sufficient cash flow. If yes, then we dive deeper and analyze it in much greater detail. If no, we simply move on to the next one. When I present new properties to Marc I often comment on the appearance of the property. I’m not sure why. Perhaps it’s a female thing? I always chuckle about it because before I can even finish my sentence I know what he will say. “I don’t care what it looks like, do the numbers work?”
Now, the property of course needs to appeal to renters to ensure you will have consistent high occupancy rates. If you are looking to make money in real estate, then don’t worry if the property you are looking at doesn’t have nice shutters or immaculate landscaping. Remember, it doesn’t have to be pretty to be profitable!
If you want to learn more about how investing in real estate can benefit YOU, Contact us.