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Analysis paralysis; many of us have a fear of overpaying, fear of buying at the wrong time, in the wrong place, and in the wrong market when it comes to real estate investing. The list of fears could go on and on sitting on the sidelines waiting for that perfect real estate deal to fall on your lamp just won’t happen. Just like you, we like to read and read and absorb information, but one thing that out-beats all of this is going out there and DOING what you have learned! In real estate investing, you may to look at many deals to find the right one BUT it is NOT a year long process. We could with 100% certainty say that we could find a real estate deal every month, even every week on our busy schedules, just because we are always looking for properties and have a system to analyze such deals quickly, efficiently, and easily.
Understanding real estate efficiently will ultimately lead to a generation of great real estate leads and deals. And over time, it will generate a funnel of 20-30 properties through your brokers, agents, realtor.com, Redfin, Zillow, etc. Such persistence will provide you 5-10 properties just based on your gut instinct alone, and then you will say WOW…THAT IS A GOOD DEAL! Once you have those 5-10 properties in front of your eyes, you can narrow it down to 1 or 2 that you will actually pursue and purchase…and become a real estate investor! REPEAT THAT MANY TIMES OVER and you will have a Rolodex of deals coming to you each month, week, or even DAY!
Now the process of finding real estate investment opportunities do NOT require you to find the lowest priced property! If you find a good deal that works for you, and you did the math, and you UNDERSTAND IT, than what are you waiting for? If you have a plan in place for your real estate portfolio and investment goals, even paying full price for a property is NOT a bad thing. Just don’y over pay and always have a place in mind.
So what do we look for in real estate deals?
1) LOCATION, LOCATION, LOCATION
2) The Right numbers; if you don’t get those right then that property won’t make the cut
And to derive those right numbers, we do some very BASIC math. We don’t want this to be over-complicated. The 2 primary number to focus on when it comes to real estate investing is income and equity (for the sake of this video). Now the 2 concepts are related, but also provide a comprehensive financial profile of the property you that is being analyzed.
Income is the money you receive from the property in the form of rent, at which you will use to pay for the expenses of the property (mortgage, utilities, etc.). It is a simple number to calculate when analyzing the investment property. INCOME is the core of your real estate investment.
For the equity, you need to look at comparable sales in the area along with the condition of the property (call it- comps) which will decide that properties current value, and if repairs are needed to be done to the property, than equity will provide you with the properties after repair value. Now unlike income, this isn’t an exact number, rather it is an estimate; however, with more experience in the real estate game, you will be able to understand your target market more and the current and future values of the properties. You can acquire equity by putting money down on the property, asking for a discount, force appreciation, or principle pay down. That equity will ultimately add to your net worth…and as physicians, we recently learned we have to work extra hard to attain a higher net worth!
Having this simple, step-by-step blueprint to follow, should provide you with the foundation to begin researching and perhaps purchasing your first or next real estate investment deal. What are your real estate investing expectations, start looking at your target market, begin contacting brokerages and create a funnel of properties and oppurtunities, don’t just side on the side line and hope for a good deal to jump in your lap.
**Disclosure: We are not financial advisors, the content on the channel is for informational purposes only and should not construe any such information or other material or other material as legal, tax, investment, financial, or other advice. Invest at your own risk and always do your own due diligence prior to investing.