Everyone is always telling you to invest in real estate. And sure, it sounds like a good idea to get rich. But when should you buy? How often? And where?
All of these questions can keep spinning in your head and prevent you from taking action.
Thankfully, GOBankingRates spoke to self-made millionaire James Heartquist, owner of We Buy Houses Arizona, who knows a thing or two about it and was willing to discuss his experience.
Be Aware: 7 Worst States To Buy Property in the Next 5 Years, According to Real Estate Agents
Try This: Become a Real Estate Investor for Just $1K Using This Bezos-Backed Startup
“As a self-made real estate investor with a significant portion of wealth generated through real estate investments, I can share that the frequency of purchasing new properties can vary based on market conditions, investment strategy, and personal financial goals,” he said. “Typically, I look to acquire new properties when the market presents opportunities that align with my long-term investment objectives.”
While he doesn’t have a timeline for buying new properties, he shared the variables that are part of choosing an investment — and need to align — before he purchases a property.
Wealthy people know the best money secrets. Learn how to copy them.
Location Matters
“In my real estate ventures, I’ve learned that the mantra ‘location, location, location’ is more than just a saying — it’s the cornerstone of property investment,” said Heartquist.
He noted that he meticulously scouts for locales that not only show promising economic growth but also offer essential amenities and a vibrant community life.
“The right location can be a magnet for tenants and buyers alike, ensuring a steady stream of income and a robust appreciation in property value.”
For this reason, he prioritizes locations with development plans that promise future enhancements, such as new schools, hospitals or transportation links. “Ultimately, a strategic location choice can be the difference between a mediocre investment and a highly profitable one.”
Explore More: Housing Market 2024: Home Prices Are Plummeting in 10 Formerly Overpriced Housing Markets
Property Valuation
Discerning the true value of a property is a skill honed through experience and careful analysis, Heartquist explained. “I utilize established valuation methods, such as comparing recent sales of similar properties, to gauge the market value accurately.”
For new constructions, he also considers the cost of land and building expenses to estimate the property’s worth.
“This valuation is pivotal in negotiating purchase prices, forecasting potential returns and strategizing for a profitable exit,” he said. “It’s a safeguard against overpaying and underestimating the investment’s potential.”
Investment Purpose and Horizon
Heartquist explained that his investment decisions are always aligned with a clear purpose and a defined horizon: “Whether I’m aiming for a steady stream of rental income, banking on the long-term appreciation of the property or planning to use it for personal needs, each goal dictates a different approach.”
This clarity, he explained, helps him tailor his investment strategy, from selecting the right type of property to setting the budget and managing expectations.
“It’s about having a vision for the property’s role in my portfolio and its contribution to my financial objectives.”
Market Trends and Economic Indicators
“Keeping my finger on the pulse of the market is non-negotiable,” said Heartquist.
For this, he monitors economic indicators, such as GDP growth rates and employment statistics, and stays informed about interest rate trends and inflation forecasts. “These indicators can signal shifts in the real estate market, influencing both the timing and the type of investments I make.
“They help me anticipate market cycles, capitalize on upswings and avoid pitfalls during downturns. An informed investor is a successful investor.”
Regulatory Environment
According to Heartquist, navigating the complex web of real estate regulations is equally crucial for legal compliance and investment success.
“I ensure that every property I consider is scrutinized for zoning laws, building codes and tax implications,” he said.
These factors can significantly impact the feasibility and profitability of a project. “Staying abreast of regulatory changes helps me mitigate risks and capitalize on incentives offered by local governments,” he explained. “It’s about playing by the rules while maximizing the investment’s potential.”
Financial Factors
“A thorough financial analysis underpins all my real estate decisions,” Heartquist added.
He evaluates his liquidity, assesses financing options and calculates the leverage he can responsibly take on.
“Understanding the cash flow projections for potential investments allows me to manage them effectively and ensure they align with my financial strategy,” he said. “I also consider the tax implications and potential deductions to optimize the financial performance of my investments. It’s a balance of risk and reward, guided by prudent financial planning.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: This Is When I Buy New Real Estate Properties
