As busy professionals, It can seem like there’s never enough time in the day between all of the zoom calls. We might resort to Amazon instead of physically going to the store, ordering dinner through one of the available food delivery services, or decide to outsource laundry to the local dry cleaners. Depending on your required hours at work, you may even resort to hiring a dog walker just so you don’t have to feel guilty about leaving your furry friend all day. The bottom line is, we all have important tasks that must get done, and sometimes that requires tough choices around priorities and outsourcing where you need help.
Investing might seem like just another thing on your to-do list, but if you take any advice from anyone, let it be that you don’t put investing on the backburner. The faster you put your money to work for you, the more quickly you’ll feel relief from the “work more to earn more” rut.
Investing in real estate requires strategic, calculated decisions and the research to help you make them. Unfortunately, you probably feel like you don’t have time to figure it all out yourself. At the same time, it’s likely you feel unsure of where to begin.
While Google’s results for “best real estate in my area” seem appealing, let me save you some time and energy. If you don’t have knowledge about why you’d explore certain metrics and what you should look for in population, jobs, or real estate reports, you’re running in a hamster wheel.
But honestly, when do you have the time to do any of that? You have endless meetings to attend, reports due, and emails that need to be written.
How Engineered Capital Helps You Keep Investing Off The Backburner
With multifamily syndications, you have an experienced team of professionals at your fingertips who are often on the ground in various markets. This makes your investment opportunities endless. You can invest in any type of commercial asset, at any value, in any city across the US. This can seem like a lot all at once, but, just like you can outsource dinner to the delivery app, you don’t have to do this alone.
I’m here to guide you toward strategic investment decisions in physical, appreciating assets that will support your financial and time-freedom goals. I do all the research, vetting, underwriting, team assembly, and asset management for you, so that you can focus on more pressing events in your life right now.
Just in case you’re still curious about the aspects of a deal that should be researched and vetted, in this article, I’ll walk you through the basic framework and checklist I use (from an extremely high level) to help narrow in on excellent syndication opportunities.
In fact, it’s important you perform your own due diligence on these 10 aspects of any deal to help you decide which investment opportunity is worthy of your hard-earned cash.
Cost of Living
Whether You Have a Competitive Advantage
Since steady job growth is indicative of a healthy local economy that’s likely attractive to new businesses, developers, and residents to the area, this is the most important metric to evaluate in each market.
Job growth is a leading indicator of population growth. The more jobs, the more residents, the more likely the area will maintain a strong tenant base. When more people are attracted to an area, the demand for housing increases, which drives up rent and real estate prices.
Since the population in a certain area could be affected by natural disasters, migration patterns, and more, you always want to research it after job growth.
Finding an area with long-term upward population growth trends (not a temporary bump) is key, and a major factor supporting that trend is job growth in the area.
These two metrics provide a full picture of the health and future of a given market.
You want to find an area with a variety of industries supporting the local economy. Strong job growth is much less enticing if you discover that most of the jobs in the area are, say, in the tourism industry.
A recession or a negative news story could largely impact the number of tourists, and therefore the job growth and the population trend. A diversified job market is much more attractive since a hiccup in any single industry likely wouldn’t affect the area as a whole.
Beyond the top 3 factors – Job Growth, Population Growth, and Job Diversity, the next best factor to learn about has to do with the laws governing rental properties.
Rent control, for example, is great for tenants but makes it incredibly challenging for landlords to make a return on an investment in an area where costs for contractors, pest control, and property management are skyrocketing.
As an investor, you want some insight from local property managers who are intimately familiar with these laws, so you can find landlord-friendly areas.
While usually the last thing on investors’ minds, taxes can make a huge difference on the bottom line.
State income taxes and property taxes will both impact your operating budget thus, your overall return. Each state has a different tax structure and it’s good to understand what you’d potentially be getting into so you won’t be surprised later.
Use Google Maps to check out the actual, physical landscape of the area. Look for physical barriers like a body of water, a mountain range, or any other geographical features that could inhibit the physical development of the area.
As an example, coastal cities are limited by the ocean. Development can only get so close to the water, which forces them to build upward or expand into the suburbs. This drives up the value of centralized real estate, especially in a time of job and population growth.
Cost of Living
By seeking out an area where the cost of living is low, especially in comparison to the median income in the area, you’re more likely to experience growth. If people can afford to live in the area easily, there is room for the cost of living (i.e., rent) to rise as more jobs and people move into the area.
While the other, previously listed factors are much more important, once you’re pretty “sold” on a certain area, you may want to track a few local news stories.
It would be great to have some heads-up about new companies moving to (or away from) the area, local announcements, community developments, and anything else that would allow a sense of understanding of the local economy and potential future of that market.
Just as with the local news, the local government is indicative of the area’s future standings. It’s a good idea to invest in areas with strong local leaders who support new initiatives, an expanding local economy, and whose vision includes making the market vibrant and welcoming.
Strong leadership from the local government is attractive to corporations, which means that job growth will continue.
Your Competitive Advantage
There’s always the chance that you have greater insight into a certain area, more so than other investors, and this is exactly why I focus on investing in the DFW area – it’s my home! Consider where you may want to invest and what connections you may have to that area.
Maybe you have a close cousin or best friend who lives there, maybe you went to college there, or you grew up there. Any time you possess a competitive advantage, more weight should be given to that market. Local connections or a little history with a particular area can put you leaps and bounds ahead of other investors.
Making the Right Decision For You
As a passive investor, you may not be touring properties and monitoring the fresh properties that come on the market like you would if you were looking for a home or a residential rental property. However, you still want to feel like you are in the driver’s seat, which means doing your due diligence to make sure the markets you are investing in are solid and meet your investing goals.
You can always dive down the rabbit hole, and search endless amounts of real estate lists, and blog posts. But looking at these ten key factors above will give you all the information you need to make a solid decision in a multifamily real estate syndication – especially since any deals that you see inside the Engineered Capital Club have been thoroughly vetted by me personally.
I do everything I can to remove the guesswork around investing and provide you all the metrics and resources you need to invest your capital confidently. My investments include purposely engineered elements of risk mitigation and control because I’m investing my money alongside you in each deal. If I’d put my money in, wouldn’t you?