Real Estate Investment Opportunity Analyzer:
Often, we are faced with Investment Opportunities (or Challenges) where we need to make a difficult or complex decision. By having a set of criteria to make those decisions with, we can simplify the process, reduce our stress and save time. By using an Investment opportunity analyzer, we can write down what those criteria are so that we can have clarity weather or not an opportunity justifies a deeper analysis.
Understanding what your criteria are for making a decision will enable you to discard those opportunities that you are presented with that will waste your time and energy. Every opportunity should meet your minimum criteria and meet at least two of your three optimum criteria.
Example - Let’s say for example I am looking to buy a commercial property as an investment, I might use the Opportunity Analyzer this way.
Opportunity Analyzer
Opportunity: Buy a Commercial Investment Property |
Does the Opportunity Meet the 3 Minimum Criteria? (Here is where you write the conditions you need to even consider looking at investigating deeply the opportunity)
Has a Minimum CAP rate of 8% | Has multiple units to reduce risk and increase cash flow. | I will be able to sell the property within 5 years for 20% more than my purchase price |
The Opportunity must Meet 2 of the Following 3 Optimum Criteria. (What will be the ideal situation?)
Has a potential for a 12 % or better cap rate | Creative Financing enables me to put 10% or less down. | Has a positive cash flow of more than $5000 per month. |
If the opportunity meets the three minimum criteria and at least two of the three optimum criteria, this is a good indicator that you probably should look more closely at the opportunity.
You can use this opportunity analyzer for buying your next vehicle, house, or even finding your next employee. Once we have a set of criteria to make our decisions with, decisions become easier and have a greater chance of success.
Feel free to copy and paste the information below to use or email me for a pdf or word version.
Tell me how it works for you
David Fuller, Licensed Realtor
Team Powerhouse Realty
Opportunity Analyzer Worksheet:
Opportunity: |
Does the Opportunity Meet the 3 Minimum Criteria?
The Opportunity must Meet 2 of the Following 3 Optimum Criteria.
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