Real estate investors that decide that they only want one type of investment real estate and not the other could be losing incredible opportunities to make money in real estate investing.
Say, for instance, that an investor is given the opportunity to invest in an underpriced apartment complex with tremendous potential for rent increases and promising cash flows and rates of return but rejects the opportunity because he is steadfast to invest only in retail property. Or, likewise, an investor that turns down an investment opportunity to own a commercial office building that shows financial promise because he prefers to invest only in an industrial building.
Though this might be acceptable for the investor that has found his niche and has already made his fortune in investment property, it is not as forgiving for the person just beginning to invest in real estate.
Those who are new to real estate investing must understand that it is always about the bottom line. Regardless of what type of investment property it is, whether multifamily or commercial, the question every investor must ask is “What is my rate of return?”
Here’s the point. If you’re a new real estate investor just beginning to invest in investment real estate, you could be losing incredible investment opportunities that could make you money simply because you’re stuck on investing in just one type of real estate property.
The solution is straightforward.
Rather than limiting yourself to just one type of investment real estate, give yourself a choice. Consider at least two types of property that seem to meet your investment strategy. That way, when a property does come across your desk, you’ll be open to running the numbers. In cases where you’re presented with two types of properties you can compare them in detail to determine which makes you the most money and is the best for you.
Naturally, you’ll want to have some guidelines in place such as the maximum price you’re willing to pay and the most restrictive terms you can accept; do not compromise your position on these issues. Regardless how tantalizing an investment opportunity appears, if you can’t purchase it on terms you can live with, drop it and find another property.
Just be sure that your requirements are reasonable and conform to your local market area. Otherwise, you could find yourself holding out for a bargain property that doesn’t exist, and you may never start real estate investing.