Being the Smart Investor

Let's face it, times are changing. The Fed just cut rates again, and buying property looks even more lucrative. Not doing your homework, or in the industry "Due Diligence", will kill a deal faster than you think.

Now you may think the usual, like checking your property's background, physical integrity, and other pertinent stuff. This is all great, and should be a usual.

Now ask yourself a question, have you conducted any due diligence on yourself?

Check your money, does this make sense? Can you afford this, and does it really work for you? When I go out and look for perspective cash flow deals, often times there is a whole lot of misleading information. Let's face it, advertisement is meant to lure you in. Many will write an ad to make you think you can afford something, or try to persuade you to think a deal make sense.

Run the numbers on your own. Get the gross scheduled income; calculate what the cap rate should be. Be very careful if the annual expenses are low. I wont deny good deals, however when the expenses advertised are lower than what they should be, check it out!

Remember, "Management, Taxes, Maintenance, Insurance, and Utilities". Those five are key expenses with cash flow property operation. If the operating expenses are unusually low, something with those five is off, find it!

Check your money, check your system. Is your support system supporting you? Is your team reliable? This should be a no brainer, but it is often overlooked. My biggest pet peeve is integrity. If you can't trust someone, why do business with them. Making a quick buck isn't always worth it.

JP Sherwood