Real estate is a popular investment option for many people, but it can be challenging to invest in the market when it’s experiencing large fluctuations. It can be a challenge to determine the worth of the property, but there are a couple of factors that you can consider when analyzing any real estate opportunity. This is how you analyze real estate deals in a troubled market.

analyzing real estate deals

Analyzing real estate deals – location

Although purchasing real estate is not a frugal investment, real estate investors often quickly assess whether a property is an interesting proposition. Seasoned investors rely on their instinct and assess whether a deal is profitable or not, based on experience. However, in an unstable real estate market where purchase prices are getting higher at rapid speed, it is important to make thoughtful decisions. If you invest in real estate, you will make the most money if the purchase price is as low as possible. Therefore, it is always important to make a good analysis to determine if an investment is worth it. Start with looking at the location you have in mind objectively. 

A profitable location will have a positive effect on multiple aspects of your journey as an investor. For example, a good location will attract tenants more easily, you can rent or sell the property for a higher price and chances are higher that your property will increase in value overtime. 


Create a Worst Case – Best Case scenario 

If you determined what kind of property you want to buy, it is best to be prepared for anything in a turbulent market. Therefore, it is wise to write down a worst case – best case scenario. For example, suppose you are investing in a piece of land for the realization of a new construction project. In this case, you always consider costs for materials, labor costs, taxes and other costs that you can estimate in advance. In the worst-case scenario, assume that the cost of materials will continue to grow exponentially and the chances of finding tenants during this time are uncertain. Using the costs from the worst-case scenario, calculate if this investment allows you to continue to pay off any mortgage and maintenance costs.

Every investment is associated with a risk, which is why you also write out a best case scenario. In this scenario, you assume that everything goes well, the costs are lower than expected and the returns are higher. This shows you the contrast between worst case and best case in writing. The last step is to create a scenario that’s right in the middle of best case and worst case. This allows you to find the exact amount you are willing to spend for the minimal amount of expected returns. Use these numbers to look for the perfect property in a troubled real estate market. This way, you’ll be prepared for the worst, assume a realistic outcome but dream of high profits, while spending what’s safe for you to invest.

Work with RSG

If you are a novice investor, it is smart to get help analyzing a real estate deal. By using the experiences of other investors and real estate experts, it is easier to make a good assessment. If you invest or develop in cooperation with RSG, we are the bridge between you and other valuable experts in the real estate market. Thus, together we ensure that the realization of your real estate project is within reach. Contact us now for more information. 



Red Sand Group | Consultancy Call

Where Investments Meet Opportunity.