If you've been wondering how to tell if a property is a good investment, you're stuck in the rut of 'traditional investing.' Essentially, this means you're still knee-deep in the research phase for your next property pick (or your first), and you're wondering as an investor if your gut and the data combined are steering you in the right direction on a potential property purchase.
- If you have to spend the time researching whether a prospective residential rental will add value to your portfolio, you're going about investing the wrong way.
- If you spend hours searching for profitable properties yourself, you're going about investing the wrong way.
- If you still self-manage your portfolio...you get the idea.
Initially, this seems counterintuitive: every 'real estate investing guru' out there will tell you to research, research, and research some more before deciding on a property. Additionally, many investors have a difficult time stepping back from the direct care and oversight of their real estate investments.
We don't disagree that data on every property you pick is the right practice, or that keeping an eye on your portfolio is a positive—but these aren't the real issues up for debate. The true problem we see with this method is that you're doing all the work of investing yourself when you could be working with a DFW UPREIT.
Freeing You From the Labor of a Portfolio
Researching any investment is the professional way of adding a property to a real estate portfolio, especially if successful, sustainable growth is your desired outcome. However, why should you have to do the work?
When you're researching investment properties while flying solo, you have to dive into the fine details of the property itself, such as:
- Square footage
And more. Additionally, you have to investigate how that property fits into the overall framework of the neighborhood and region in which it's located with insight into:
- Comparative properties in the area
- Return on investment potential and growth
- The local and regional economic outlook
- The relative number of nearby vacancies
- Where housing trends are headed long term.
Keep in mind; this is by no means an exhaustive list of the research involved in how to tell if a property is a good investment!
Top all of that research off with the time and effort involved in securing funding (even if you happen to leverage Other People's Money) and navigating the delays and time involved in the closing process (like crucial property inspections). Then, 'just' rinse and repeat this process for every property you intend to add, and that's a significant workload and time sink to even acquire properties.
We haven't even mentioned the additional tasks that can exhaust investors:
- Finding and screening renters
- Fielding repairs and necessary maintenance
- Navigating capital gains tax if you decide to sell rentals
- The difficulties involved in leaving real estate as an inheritance.
This is just another reason why a DFW UPREIT is the only smart choice for investors looking to pick the right property (every time) without the workload.
An UPREIT Meets Multiple Needs
If you ever intend to sell your portfolio or leave it as part of your legacy to your favorite charity, there's additional work involved in your selection process when determining how to tell if a property is a good investment. It's challenging to leave a diverse portfolio of DFW properties to relatives or charities out of state who will then have to handle the stress of the sale if they choose not to continue operating your properties as rentals. Talk about a tax nightmare!
However, limiting your property purchases to wherever you see yourself in the future also limits your potential as an investor—as well as the diversity of the portfolio itself and any returns you can expect to see. This is why the Peak Housing REIT is an ideal opportunity for investors looking to invest in the right properties from the start.
- UPREITs professionally manage, scout out, and select successful investment properties for you.
- Investors tap into this pool of diverse properties through the purchase of operating units or by the conversion of a portfolio they already own into operating units using the 721 exchange process, tax-deferred.
- Returns from the Peak Housing REIT are greater than any one investor can expect from their portfolio alone, and operating units make gifting easy! Until you decide to sell, your units are also tax-deferred.
A DFW UPREIT can provide you with these kinds of exceptional benefits because they aren't limited by the issues that impede individual investors—and underperforming properties don't stay in the portfolio.
Isn't it time you left the hassles of traditional investing behind? If you want a successful, passive real estate investment portfolio with easy transitional options for future gifting, learn more about why you should leave the 'landlord life' behind with our free guide: Let Freedom Ring!
Posted by The Peak Group on August 27, 2020