Anyone who makes investments needs to have a goal as to what they want to achieve. This is especially true if you are investing in new condo developments.
A core filter is basically a reference point for an investment goal. Any core filter will assist in narrowing down investment options, by letting only the best options through. Smart real estate investors will use the filtered information to their advantage and will only invest in the assets that have passed the rigorous filter test.
Here are the top five real estate investment filters that have proven successful time and time again:
The focus filter will allow you to only look at 5% of the available investments. It will remove all of the property investments that will simply not allow you to reach your ROI goals. This is a pretty significant time saver overall, which is why it should be the first filter you always use.
The time filter will group the investments into two categories. The categories will include those properties that require quite a smaller amount of time and effort to manage and those which do not. If you don’t have a lot of time to put into your investments, it will obviously not be beneficial to choose projects that require a lot of your time. One caveat to this filter, the only projects that should be considered with the extra time commitment as a positive are renovation projects. If the proposed rewards are so large at the end that it pays quite a bit more than the time spent, then it will be worth the investment in the long term.
Are you going to be able to handle the property if it is vacant for a long period of time? How many people are looking for properties like this? Many condo investments are different when it comes to rentability and timelines for vacancies.
Math is basically making sure that everything adds up. You will want to do your research on everything about the property. You will want to make projections as to how well the property will lease or sell. This step should only be done after the first three, because it takes a pretty decent amount of your time. If you’re not sure that a property is going to be successful before you get to this stage, then you are probably not confident enough in the project to start this step.
The stress filter will help you determine if this is going to add stress to your life. There are many factors that will weigh in on this decision, because each opportunity is unique. If you think that the project will create any additional stress in your life, long term, then this is definitely something that you do not want to invest in.
By following these simple steps, any investor should be able to make better investments decisions that will help them achieve their short term and long term goals.