Working as a real estate agent and investing heavily in revenue properties I am always asked by my clients 'What to look for when investing in real estate?'.
Everyone has heard of the common phase uttered by real estate brokers and the general public: LOCATION LOCATION LOCATION. This might be true when purchasing your home and hoping for appreciation but it's usually not the case in investing.
The key in revenue properties or real estate investing whether it's a multi-unit building, multiplex, condo or house is CASH FLOW CASH FLOW and CASH FLOW. That's it! When I was studying accounting I learnt that anything that puts money in you pocket is called an Asset and anything that takes money from your pocket is a Liability.
So when looking to buy an investment property, no matter where the location is, make sure to make the cash flow analysis and if you are left with positive cash flow then you can investigate further. And obviously if it's negative then just walk away! It's called investing for a reason - you should be making revenues!!
I will get into how to calculate the cash flow analysis next week. Please stay tuned.