Ways to Know If a Real Estate Property is a Good Deal
Each homebuyer likes a great deal in terms of their real estate purchase. Based on a report, condition and location are 2 primary determining factors to decide if a real estate property is a good purchase. Although price matters, searching for a property, which can be overhauled with little time and effort might not be easy. Anybody who has purchased a home with an intention to fix it up knows that there might be hidden challenges and problems that are not identifiable easily even with the finest home inspection.
It takes a keen eye to know if a property is worth your investment. Below are some of the tips to determine if the property is a great deal:
Follow the 1% Rule
There are numerous ways to assess your investment returns when buying a property. The golden rule is to use the popular 1% rule as your investment strategy. 1% rule states that income property must rent for at least one percent of the purchase rate to get positive cash flow. Due diligence can be analyzing the rental rates in fair market around the area.
Check Cap Rate
Cap rate or the ratio of price and earnings versus the neighborhood is a signal even if sometimes there are legit reasons for the sellers to be motivated compared to others. Also, a successive price drop can signal a good buying opportunity for all.
Get a Sense of Presentation and Condition
The property’s condition along on how it’s presented will typically dictate if the property can be bought at discount. Therefore, if your preferred property does not have online photos, it might have zero curb appeal. It means that significant discount may be requested on the price and the listing agent does not have much to work with and might be after the quick sale.
Take Look of the Property’s Roofline
Consider looking at the roofline. It’s a trick from well-known home inspectors. This is the first thing that you should look at. It will tell you if the property looks complicated, sturdy, elegant, simple, weak or vulnerable. Roofline will reveal everything for you.
County Appraisal Value vs Assess Purchase Price
You can easily determine if the property is a good deal by just taking a peek of its address and county appraisal district site. Know the address and if its selling price is below the value assessment of the county, you have ninety percent change you’ll profit from the property. The reason behind it is that its fair market value is determined by the appraisal value of the county plus ten to twenty percent over the assessment. Take note that your first step always matters.
Know If the Price is Less Than Its Monthly Rent
If you can purchase an investment property for a certain price like $500,000 and rent it out for $5,000 monthly, it is likely a great deal. While it simplifies all factors in real estate investing, considering its price as a factor of a hundred times its monthly rent is easy and quick baseline to get a good price on the real estate investment.