Looking for New Residential Assets (My way 😏)
I use a more of a hybridized way of looking looking for and ensuring that my residential assets maximize their yield and run as efficiently as possible. It’s very likely that there are other people that would do something like this or look at the same factors as when I look for new residential assets. I’ll detail the factors I look at below to give a more granular perspective.
START WITH THE LOCATION OR AREA
As they say location, location, location and for the most part that stays true. I look at the location that I would like to enter or expand on. Then I ask myself the following questions:
How accessible is it?
Is my team able to service it or do I have the capacity to service this new one?
How is the area doing in short term rents and in long term rents?
With those three questions I satisfy my feeling of uncertainty of the area.
HOW ARE RENTS AND RENTAL DEMAND?
In the process of looking for the best possible revenue you would have to look at the rents in the area and where the area is or at least appears to be on the Real Estate Cycle. The Real Estate Cycle graph looks a lot like a bell curve. I’ll add an image so you can see an example:
Now identifying in which phase your market can be pretty tricky sometimes because the phases share traits that can easily send you in the wrong path. We’ll dedicate another post to this not this one.
NEXT: HOW IS THE STR MARKET DOING IN THE AREA?
This is where I diverge a bit since I take into account revenue that the Short Term Rental market can provide to make sure I’m making the most possible at any given time be it by short, mid or long term rents. A quick and dirty analysis should do the trick at this stage, but, once the investment is in the pipeline we need to clean up and get a good idea of how much is it actually going to make.
So now that after knowing where I want to go and enter I count my pennies. So depending on how I would structure the deal then the alternatives to financing it come to play. Real Estate can be a very cash intense model up front I’m nit at the point were I can make this decision on the fly fund the LLC have it sitting for two months and then initiate the purchase process. I’ve had to get creative with my previous investment and the expansion of the company.
To wrap up, with that last line I want to make it clear that there are multiple ways and resources to fund a Real Estate project and theres tons of material out there to check out. Our material will be coming out soon as well so I’ll leave it till then to continue this conversation.
-Gian from Hostpitality
