Sarasota Investment Properties - How to Tell the Good From the Bad

Sooner or later, investors of every age or stature in the community will have heard all the real estate scuttlebutt jargon they care to hear. It comes in several recognizable forms: "Where are the good deals anymore, I can't find them?"

"You know Fred, I had this good deal all locked up and then lost it to a higher bidder."

And the ever popular Mantra: "I sure wish I could land a good deal once in a while!?"

That said, investor wannabe's are all different, in terms of agenda, pricing, and location. What might be the "best deal in town" for you may have been passed over and totally ignored by a dozen investors who thought it to be a bad deal. Which may have you scratching your head and thinking: "What do they know that I don't?" The real estate trails are loaded with little torn pieces of "what-if" papers.

Decades ago, a wise investor had shouted to any person who would listen that investment beginners tend to focus on what is commonly known in real estate parlance as "technique," and eschew more important issues. The formula for learning how to spot a "good deal" doesn't magically float down in a parachute with your name on it including specific directions. Good real estate deals come from education, research, and most of all, experience. The experienced "high rollers" usually have the best formula; ergo, close most of the best deals.

What is a good deal formula?

#1 - A property that will not "eat-you-alive" in costs. One that provides income with a positive cash flow. And a property that doesn't require a ton of rehab money to meet the PITI mortgage payment.

#2 - A property you can "leverage." The less cash upfront you put down allows you to buy more properties. If the property goes up in value, so does your rate of return. On the downside, if the value goes the other way, you may be faced with a negative cash flow, and that's not good for your pocketbook. However, if you're in the game for the long haul, since real estate is cyclical, you'll win in the end. On that subject you should keep in mind that a "no down" deal may put a smile on your face, but should be approached with some caution.

#3 - A property that presents risk often times might be a consideration, but require you have an alternative plan in place. Comments like: "It looks great," "Gee, I love the location," "sure there are vacancies, but a little rehab will work wonders." This is the time you should have a "Plan B" which means expect the best, but plan and prepare for the worst, and know what color a caution sign is.

Look folks, the reason you're investing in real estate is to make a profit. If your consideration is a 4-plex unit, will the income justify the mortgage payment? Is it a fixer-upper? Are the rents inline with other units in the area? Does it have any profit potential? Price versus value are the keywords here.

Finally, in small or large income rental property, the question before the board of common sense is: who is going to manage the units? Are you in over your head? Yes, good deals are out there. You just need to know what to look for and make the ultimate decision: will it be a good deal or a money pit?

We'd love to help you find the perfect Sarasota investment property. Please don't hesitate to contact the team at Key Solutions Real Estate Group for assistance, or call (941) 894-1255.