The Number One Rule of Real Estate Investing
The number one rule of real estate investing. Do you know what it is?
There’s one rule of investing and it’s so extremely simple. I mean it’s the one thing that if you do incorrectly, it’ll tank your business. However, it’s the number one thing if you do properly, you will see returns for a lifetime. Do you want to take a wild guess? It starts with “L” and ends with “N.” No, it’s not “learn” even though that’s part of it.
It’s the location.
This rule applies 100% of the time anywhere that you’re going to go. If you have a good city and you understand that, let’s say Chattanooga, Tennessee is a good city to invest in, then you just have to find a couple of the neighborhoods and it really doesn’t matter what kind of property you buy.
It can be a two bed, two baths, three-bedroom, one bath, three bed, two baths, whatever is standard for the area. But if you’re absolutely convinced that this area makes a whole lot of sense for you to be in and you can really move and groove and buy property in that area for a long term investment, then you’re rock solid. And I’m talking about single-family rentals.
With SFR, you’re generally looking fo ra three bed , one bath, or a three bed , two bath that you can purchase anywhere between $50,000 to $75,000 because that’s your swing zone. You don’t want to purchase property more than a hundred thousand dollars. For long term, you want to see the benefit. You want to see cash flow. You want to hit that 2% rule eventually, or maybe even what’s more realistic these days is the 1% rule.
Pay attention to the market. You want to see good returns. Pay attention to the market. You want to see good appreciation. Pay attention to the market. You want to see good tenants and long term tenants for a long term cashflow. Location, location, location. Number one rule in real estate.