Selecting the right property is critical to investors. The wrong choice could result in thousands of dollars in lost revenue, if not more. This guide is the first in a five part series which will discuss selecting the best property depending on your investment goals in Hawaii and how different strategies impact your goals as a landlord.
All right, so you have some money and are itching to make it grow, but how do you get started?
Different strategies and goals will call for different types of properties. Some property owners are interested in cash flow; typically a long-term investment. Others focus mainly on appreciation which generally is a short term approach. So you want to get something in between? No problem, just be sure to do your homework.
The first step in selecting a property on Oahu is to determine what your goals are. Long-term investments, which usually last ten or more years, are typically designed to generate cash flow. Real estate is notorious for its ups and downs. While some areas tend to fluctuate in value more than others, these investors are focused on their monthly income. This could be a retired couple, someone looking to build a small portfolio, or anyone who is looking to have a little extra money in their pocket each month.
Alternatively, short term investors are not as concerned about the cash flow. They are looking to make money quickly and cash out to flip their money into another investment. This style tends to be more aggressive and requires the investor to watch the market closely so they can time it just right. This style is better suited for someone who is experienced in real estate and is not worried about mistiming the market.
Then we have those in-between; more aptly called inbetweeners. Maybe they are new to real estate investing and their not quite sure what direction they want to go. They could like the idea of having some extra money but can’t pass up on the potential for appreciation. Most landlords will fall into this category. After all, who would want to have the best of both worlds?
Once you have chosen which goal matches your style of investing, its now time to evaluate your strategy as a landlord. Are you the type of property owner who doesn't mind higher turnover rates or more frequent repairs? Or do you prefer longer term tenants who may take a little better care of your investment? Stuck in-between again? This guide will focus primarily on different strategies in three main categories which ultimately affect your goal as an investor; selecting the right location, determining the right rent amount, and determining the type of tenant that is best suited for you.
December 2, 2013