Real Estate Investment – 1
Real estate experts the world over ponder as to what are the best metrics implied to do evaluation for the real estate project. If one looks at a potential investment should he be just confined to the size of the property, or the state of maintenance or the external factors too should be implied. Or in other words what are the issues that a potential buyer would be interested in getting into real estate. What is it that turns the place off from the moment one walks in the door. There is no straight answer. At times those bulges and cracks can be the reason why one may not put his money into that project. Foundation problems scare off most investors, which decreases competition and can soften up pricing.
But how to evaluate a deal like this? Or any deal, for that matter? On an academic level, evaluation criterion and considerations can be divided into two categories:
- Quantitative: How does one expect the property to perform as an investment? For this part one can whip out a calculator, or a spreadsheet, or evaluation software and run some numbers.
- Qualitative: one needs to ask “can I pull it off?” If you’re like the vast majority of real estate investors, then you’re a part-timer. That means you’re going to have to tackle this project on top of your “day job” and manage it afterwards. This part of the analysis will take some soul searching; a calculator isn’t going to help you here.
