“Concreting a real estate investment can be much more difficult than you think. Of course, everything would be easier if you take into account several factors that will define whether your operation is a success or simply a terrible nightmare.

On the subject, here we propose a list of the five factors that define whether your real estate operation is successful or not.

1-Select the location and the asset: This and no other is the first step in any investment of this type. In this case, the so-called “investment horizon” is key when determining the position.

 It is better that the chosen place is recognized. Otherwise, you would need more time to develop your business and could even lead to the failure of the operation. It is not enough to be promised that the area will be developed; it is more important that you perceive it with your own eyes and see all the potential that a great location offers to your invested money.

2-Search and conduct due diligence. Every real estate investment is full of risks, challenges and many potential pitfalls. The most important thing in this aspect is to do your homework and check, in detail, the history of the selected developer, above all, check the quality of their previous projects and their financial situation. In addition to this check, you should ask yourself a minimum of 20 questions about your investment, which will force you to evaluate other possible risks.

 3-Perform a financial analysis. Before taking the first step, you should familiarize yourself with the current tax structure, payment plans, mortgage calculation, among other details that will define whether or not you can jump into the challenging waters of real estate investment. Remember that you must know how the laws of the place where you are going to put your investment work before making it.

4-Define an exit strategy. In ideal conditions, the common investor abandons his project or changes it at the moment that he obtained the initially expected profits. Of course, some of them prefer to stay indefinitely and guarantee the cash flow, even if this is not the best option. You analyze before making a decision with all the financial elements in hand and you will not regret it. Always leave an emergency exit where you can save your money.

5- Stay focused. The most important of all these suggestions is that you always keep an eye on current market trends. With simple observation, crises that are detrimental to your business can be spotted.”

Source: Bienes Raíces America