The Fundamentals of Property Investment – Part 2
Assessing an Investment Opportunity
When it comes to property investment, the most important factor that you must always keep in mind is that – Time Is Money! Valuing your time and knowing how to maximise your day to your benefit means that it is important to learn how to quickly assess whether you should invest your funds in a property deal or not. Here are 8 questions to ask that can be covered in 5 minutes:
- What terms are they proposing for the deal?
Do they need capital investment alone or is it a partnership – will you receive a percentage interest on your funds (private investment) or a profit share?
- How much capital is needed to complete the deal?
Are you the sole funds provider or will other private investors be involved.
- How long will the funds be required for?
How long is the project expected to take and has extra time been included for potential delays.
- Exit Strategy – are they selling or retaining – how will they release your funds to return them to you?
- Due diligence – have they done theirs?
Demand, Saleability – is the end product (design and finish) appropriate for the location, population & demographic, have they obtained comparable evidence or do they have local experience to support their back-end property values?
- How soon do they need the funds?
- Security – what security are they offering in return for your funds?
- Legal contract – what written agreement will be in place?
You might be thinking that you need to know the details of the property in question such as type, number of bedrooms, overall square footage, location, supply & demand but the above questions are most important for quickly assessing if a deal is right for you. The property specifics form part of the second stage of assessment – your Due Diligence!
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