Buy the numbers, not the story

A good investment still works when the optimistic assumptions are removed. Before you make an offer, run the figures with a realistic vacancy rate, a repair budget and today’s financing costs. If the deal only makes sense when rents rise next year, it isn’t a good deal yet.

Know the block before the building

Neighborhoods change one street at a time. Walk the area in the morning and again at night, talk to the people who live there and look at what has recently sold nearby. Local knowledge will often tell you more than any listing description can.

Keep a cash cushion

Roofs, boilers and vacancies rarely arrive on schedule. Setting aside several months of expenses means an unexpected repair stays an inconvenience, and you won’t be forced to sell at the wrong moment.