Are you looking for investment property in Omaha? Finding the right property can be a challenge and it takes more than a great price to make a great investment. This post offers suggestions to make sure you’ve found the right one!
Are you thinking of buying an investment property in Omaha? That could be a great decision or a risky choice. The wrong property could cost you your time, money, and even your sanity! Okay, that’s a worst-case scenario, but investors have some of the best horror stories. The important thing is to treat your investment objectively, with forethought and an objective look at the property from all angles. Buying with your heart will almost always get you into trouble. Here, we offer 5 considerations to help you make a great decision about Omaha investment property.
1. Know Your Limits
Know what you can afford, what level reserves you need, and how much time and energy you are comfortable investing. If you are new, consider a house hack (buy a 2-4 unit building and keep one unit for yourself) or a live-in rehab. After 1- or 2 deals you can stretch further, but most investors don’t hit their stride until they’ve done about 10 deals. After that, they start thinking about multi-family units. One of the biggest problems is how you will handle unexpected repairs. Having capital set aside or time to make your own repairs is important. Working with a mentor is also invaluable for catching big mistakes and recognizing risks. Be cognizant of what you can realistically afford and how much time you will be able to dedicate to the property. Don’t get in over your hear or think that you will be able to pull off the big deals after simply reading some books. Take your time, know what you’re doing, and learn from the right people in order to make smart real estate investment decisions.
2. Buy On Facts, Not Emotion
I learned long ago that just because I like something, doesn’t mean the “market” will like it. Buying an investment property is very different than buying a home for yourself. You may be looking for an emotional tug when buying your home. When buying an investment property, it’s all about the numbers. It will take time, but the goal is to be emotionally attached to good numbers, not the style of the kitchen faucet. It’s easy to get caught up in design details and forget the big picture. Your goal is to provide a safe, comfortable, and well-maintained space.
Another “fact” to consider is what level of rehab is needed. If money is tight, you may be able to delay some upgrades until later. Those that increase the value of the property aren’t really needed until you are ready to sell. You can even plan updates for tenant turnovers.
3. Understand The Numbers
It’s all about the numbers. Remember that every property has a good price and you never want to pay more than that. Your analysis will tell you if this investment property makes sense or not. Always ask the seller for financial reports for the property. At a minimum, they should provide rent rolls, expenses, and recent improvements. You can also ask for a P&L report, income statement, and tenancy reporting (more detail and history than rent rolls). The goal of studying these reports is to have a clear understanding of the property’s operating costs and cash flow. The more information a seller can provide you with, the better. You need to determine what price is reasonable for this property’s income and expenses.
4. Work With A Partner Or Mentor
Whether you are new to investing or a seasoned pro, working with a partner or mentor will help you improve your game. They will guide you during challenges and provide insight where you might have missed it. Ideally, their experience and skills will complement your own. Most successful investors with multi-million dollar portfolios are actively working with others to improve their own performance. In a partner relationship, expect to share in the effort and profits of the deal, so make sure you are working with someone you like, trust, and can count on to hold up their end of the deal. You also need to do the same. Sometimes partnerships last for one deal and sometimes they last for a lifetime.
5. Your Exit Strategy
Sometimes a property starts out great, but then things change. It’s important to know how you would exit a property before you suddenly need to sell. Do you know the buyers in Omaha? What are they paying? You don’t want to find yourself stuck with a property you no longer want, possibly missing out on a more profitable investment or opportunity. As an Omaha investor, you should always have an exit plan in case you need to sell the property quickly. Ideally, you might have several, but that’s a different post. 🙂