five fundamentals that I look for in every great real estate deal and so should you elements of the
first four should be in every real estate deal you consider if you can create an opportunity for The
Fifth Element to be applied to a deal you are a boss level in your market and well done what I'm
going to share in this video are the fundamentals I believe make for a great real estate deal I
believe these are Universal investors will have their own criteria and terms and everyone's will
differ but it's important to know what your criteria and terms are including what type of
property you're seeking what's your budget what's your required yield and return every investor is
going to have a different requirement but this video is not about terms and criteria it's about
five elements every investor should look for no matter their experience their budget their risk
tolerance the yield they require or the location of that property they're seeking so let's get on
with the five elements I look for within a perfect property deal and so should you too
number one the ability to add value if I cannot see a way to add value to a property that I
control I don't think there's a point in me buying it I need to be confident that I can add
value with my knowledge my experience or know the people who can actually add value for me they say
making money on a property happens on the day you buy that is kind of true but adding value doesn't
have to happen on day one it can happen over a year or two but you need to know that you can
add considerable value if you follow a set plan over a set time frame adding value can happen in
many different ways including refurbishment of a property improving a legal title also regaring a
commercial lease adding additional floor space changing the use to a more desirable or more
valuable use changing zoning achieving planning permission and the list goes on I've even heard
of investors changing the name of a development to improve the value and it's not unheard of that
developers or investors will actually change the entrance of a developer development onto a more
desirable Street to increase the value there's a very famous development in Dublin that a wall was
built around us and a bridge was constructed to change the address and change the postal address
of that property on that site adding Millions to the development just by changing the postal
address there are countless ways to add value to a property but the important element is do you know
how to add value to the property before you buy it perhaps with your experience your Insight over
the market perhaps that gives you a Competitive Edge or you know people that can actually provide
that insight for you and give you a Competitive Edge over the market but it is important that
you know you can add value to a certain property before you actually buy it number two multiple
uses I always want to plan B and this applies to commercial and residential property it's more
obvious in terms of commercial property if you buy an office block you need to know that you have a
few options on tenants the more options you have and the more demand that there is there for that
particular type of use the better but it's also great if you know you can convert that office
into a different use if needed but what happens if it's a retail unit or a very specialized retailer
let's just take Ikea for example I'm not saying that they're not a blue chip tenant but let's take
worst case scenario let's say they move totally online or they move to a bigger unit down the road
you would find it extremely hard sourcing another replacement tent for the boxes that they currently
operate in in terms of that specialized use also you have to consider what's happening to malls all
around the US many investors are scrambling or scratching their heads to find alternative uses
for those malls and it's quite hard sometimes they're being converted into college sometimes
they're even being used for 80s movies but the use cases are quite limited and therefore it
is a factor you would have to consider if you were going to buy one I've also seen it with
development sites developers and investors might acquire a certain site with an idea in
mind to develop something that is marketable or is in demand at that time but by the time they
actually get their planning permission the market has slightly shifted I've seen it in cases where
people have tried to develop shopping centers only to find that at the council have granted planning
permission for another shopping center a mile down the road and therefore their business case
has gone out the window and perhaps the site isn't suitable for housing or there's no office demand
in the area for that particular site and their investment and plan goes out the window so it's
always important to have a backup plan I looked at hotel sites on behalf of developers and I've
created development appraisals for hotels but I would also create a development appraisal for a
bill to rent option or an owner occupier apartment complex because I think it's always important to
have a backup plan and it's not just commercial residential also has its risk as well you do need
to consider multiple uses while the risks are slightly less faster still is risks there for
you to consider in terms of multiple uses perhaps it's just considering multiple different types of
tenants if you're in a city perhaps staff risk is quite low because there's lots of different
opportunities to find tenants however if the property is based around or the rental market
in a certain location is based around one particular major employer or one particular
College what happens if that employer or College closed down that could have major impacts on your
property and your ability to rent that property it's also important to consider from a holiday
lap point of view some areas can be extremely trendy but they can go out of favor with tourists
and this is something you need to consider as well basically don't put all your chips on one
tenant have multiple different options number three increase income the ability to increase
the rental income over time is extremely important and even more important in times of high inflation
rental caps on residential property could devalue the overall property and reduce their real income
over time the ability to increase rent on commercial property is extremely important
most commercial leases allow for the rents to be reviewed every five years and it is a great
way to increase the value of the property as well knowing and having the ability to increase
the income of an investment property is key to good property investment if you don't know how
you're going to increase the value of a property props over a five-year period I would question why
you would even consider buying that property and perhaps it's a better time to sell number
four marketability if you don't know who and how you're going to sell the property to in the future
you shouldn't buy it if you know you're buying a property with questionable title you have to know
or be confident that you have the ability to fix that to make sure it is marketable in the future
and you have to be extremely confident that you have the ability to fix that issue you also have
to be confident that there will be a market for that asset in the future Tink will there be a
market for this type of property in five years ten years or 20 years think of retail will there be
a market for certain types of retail in 20 years time so there are the four top things that I would
look for or you should consider outside General due diligence when you're considering buying a
property before I share number five if you are interested in real estate investing I put out
videos all the time so consider subscribing to the channel I have got an increase in requests
for one-on-one Consulting recently so I have dropped a link in the description and also
make sure you do subscribe to our mailing list if you can manage to take off elements of one
to four in a deal that's amazing but if you can add the next one to a deal you are playing with
the elites number five get a Blue Chip tenant to sign up to a long-term lease with rental increases
before you buy a vacant building as the value for commercial property is in the lease you can
buy vacant properties at a discount but if you know the requirements of a blue chip tenant in
advance and can't agree favorable lease terms you can can buy a vacant property at a discount and be
very confident that you will increase the value of that property considerably the day you sign this
does require a lot of moving Parts but if you can get everything online secure a vacant property at
a discount knowing that a prime tenant will lease it from you you will have major money going in and
the bonus sometimes tenants will even do the refurbishment costs you might ask how do you
actually create such a deal well it's not easy but nothing ever worthwhile is first you need
to know what the Blue Chip tenants requirements are including the size their price per square
foot their lease terms and where they want to locate you also need a good relationship with
them then you need to find a property that matches their requirements and agree a deal without anyone
knowing it can also work when a blue chip tenant finds a property themselves a great deal and ask
an investor to step in on their behalf and buy it and they'll lease it back from them to make
this happen you need a good relationship with the tenant and then you trust you if you want
me to expand on any one of those five elements individually let me know in the comments below
but that's it for this video I will have a video in the next few days but if you can't
wait perhaps YouTube might suggest a video that you will like here as always thanks for watching