Thursday, January 29, 2015

My Investment Strategy Part 2 of 3 - Real Estate

No big surprise that part of my investment strategy is in Real Estate.  I invest in Real Estate mainly through rental properties with Sis.  Currently we have three properties in Calgary and one property in Edmonton.  We have two criteria when we evaluate a property for purchase:

Appreciation potential:
  • Is this property priced right or under/over priced?
  • What is the price we can likely negotiate?
  • How long do we expect to keep this house for?  What kind of appreciation can we expect when we sell?
  •  Are there any improvement costs we will need to invest immediately to bring this property up to par for renting? 
  • Are there any improvement costs we will need to invest over time to up keep or prepare the property for selling?
Cash Flow:
  • Will this property be cash flow positive?  i.e. we want the income to cover expenses so we don't have to inject money into the rental monthly.
This is the primary way we invest in Real Estate.  Then we also put a small budget aside for investment in the occasional property flips, and land investment through private companies.