Investing in real estate can be a powerful way to build wealth — but not every property is a good investment. Whether you’re buying your first rental or expanding your portfolio, here’s what to look for:
Key factors that make a great investment property:
- Cash Flow Potential: Monthly rent should exceed expenses (mortgage, taxes, insurance, repairs).
- Strong Local Demand: Choose areas with low vacancy rates and growing job markets.
- Value-Add Opportunity: Look for properties that need minor improvements to boost rent or resale value.
- Appreciation Potential: Long-term value increases matter for exit strategy.
- Landlord-Friendly Laws: Some areas are easier to manage rentals due to favorable regulations.
Run the numbers using metrics like cap rate, cash-on-cash return, and rent-to-value ratio. And always budget for maintenance and vacancies.
