5 Critical Questions for Successful Real Estate Investing

Real estate can replace your income, but only if you approach it as a business. These are the questions I work through before any purchase.

1. What is my goal for this property?

Cash flow, appreciation, and tax benefits are different objectives, and the property that delivers one may not deliver the others. Name the goal first.

2. What does the market actually support?

Rents, vacancy rates, job growth, and the direction of the neighborhood matter more than the finish quality of the kitchen. Research the market before the house.

3. How am I paying for it?

Know your financing, your reserves, and your break-even occupancy before you write an offer. A property with no cushion is a property that will eventually own you.

4. Who is doing the work?

Self-managing is a real job. Property management costs a percentage of rent, and that cost belongs in your projections from day one.

5. What is the tax picture?

Entity structure, depreciation, and how you classify your activity affect your after-tax return substantially. Get advice before you buy, not after.

Answer all five and you will pass on more deals. That is the point.