How to Identify Your Investment Style

Before you consider investing in real estate, it’s critical to determine the type of investor you plan to be. Identifying early on how you see your role as an investor, will help determine the types of properties to target for investment.

POP QUIZ! Below are two types of investment styles to help you determine your investment preference. Place a check mark next to the statements that most resonate with you. The category with the most check marks is your investment preference.

PS - There’s no wrong answer!

Active Investor:

___ I’m looking to be a long-term investor.

___ I’m comfortable carrying the cost of a property.

___ I’m more comfortable with low market volatility.

___ I prefer a “building equity" mindset.

Passive Investor:

___ I’m looking to be a short-term investor.

___ I want to quickly flip a property.

___ I prefer a faster return on investment.

___ I’m comfortable with high market volatility.

For those looking to become an active investor, it's critical you're honest with yourself - and those you may be going into business with - about your expectations for a long-term investment. Below are some considerations:

  • PROPERTY UPGRADES - How many upfront costs are you willing to spend to get it tenant-ready (total gut job vs. paint refresh)?

  • PROPERTY TURNOVER - What is the length of the lease? How many months of capital do you plan to have in reserves during the turnover process? Are you prepared for a tenant breaking their lease?

  • PROPERTY PRESERVATION - How much do you plan to keep in your reserve fund for property maintenance? Are you comfortable fronting the costs of major maintenance upgrades (new roof, HVAC, etc.)? How much do you plan to reserve for normal property turnover "refresh" costs?

  • PROPERTY MANAGEMENT - How active do you want to be in the day-to-day management of your tenants & the property?

  • LANDLORD/TENANT ACT - How familiar are you with tenant rights? How familiar are you with landlord rights?

  • SCREENING PROCESS - What are the criteria you have for your tenants?ie. credit score, gross monthly income, criminal records, rental history, etc.

  • LEASE AGREEMENT - What are the stipulations? Pets, subleasing, lawn maintenance, etc?

  • HOAs - Is the property within an HOA? If so, what are their rental rules (ex. minimum/maximum length of a rental)?

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