Many realtors believe that five of the keys to investing in real estate property are location, property condition, price, financing, and the seller's motivation and flexibility. Try making a chart where you can evaluate each subject and assign a value between 1 and 3 to each one. A bad rating is close to 1 and a good rating is close to 3. At the end, when you add up the numbers, you should end up with a value of 12 or higher. This means you have a property with potential for investment.
When analyzing location, check out if it is in a place of easy accessibility to all necessary amenities and transportation, if it's at least a middle class suburban neighborhood, if houses around it are in similar price range and if there is good foliage and landscaping. These are all good indicators that the place you are checking out is in a good location.
Regarding property condition, it should be new or fairly new. It can be old, but with recent renovation, clean inside and outside, and with good landscaping. Pipes, electricity and roofing need to be in good state, and new components have to be replacing major items like toilettes, doors, porches and so on.
One of the most important keys to investing in real estate is the price. There is really one basic rule on this subject if you want to be a good investor. The place should be at 10% or more below the market price. Do your homework and ask the seller this information or get it out of neighbors and other realtors.
The toughest subject to understand is usually financing, which is why it is important to read books about it in order to master the concepts and have clearer picture of what you're looking for. In a nutshell, what you need is to find a seller that is willing to handle the bigger part of the financing with a rate lower than what is expected of the market and with no big payments in the next 7 years. This allows you to spend less cash and make a bigger profit.
The final subject has to do with the seller's motivation and flexibility. Your best bet would be people that have a strong sense of urgency to sell their home and aren't in need of big cash for it. This includes people who are urgently moving, divorced couples and owners in general that are just sick of their homes and want to get rid of them. Be sure to be the one person ready to offer a solution to their problems.
If your little chart adds up to 12 or more then you know you have a potentially profitable property. Mastering all the keys to investing in real estate property takes time and practice, but now that you know what they are, you can start to look for those gems out there ready to make your investments pay off.
When analyzing location, check out if it is in a place of easy accessibility to all necessary amenities and transportation, if it's at least a middle class suburban neighborhood, if houses around it are in similar price range and if there is good foliage and landscaping. These are all good indicators that the place you are checking out is in a good location.
Regarding property condition, it should be new or fairly new. It can be old, but with recent renovation, clean inside and outside, and with good landscaping. Pipes, electricity and roofing need to be in good state, and new components have to be replacing major items like toilettes, doors, porches and so on.
One of the most important keys to investing in real estate is the price. There is really one basic rule on this subject if you want to be a good investor. The place should be at 10% or more below the market price. Do your homework and ask the seller this information or get it out of neighbors and other realtors.
The toughest subject to understand is usually financing, which is why it is important to read books about it in order to master the concepts and have clearer picture of what you're looking for. In a nutshell, what you need is to find a seller that is willing to handle the bigger part of the financing with a rate lower than what is expected of the market and with no big payments in the next 7 years. This allows you to spend less cash and make a bigger profit.
The final subject has to do with the seller's motivation and flexibility. Your best bet would be people that have a strong sense of urgency to sell their home and aren't in need of big cash for it. This includes people who are urgently moving, divorced couples and owners in general that are just sick of their homes and want to get rid of them. Be sure to be the one person ready to offer a solution to their problems.
If your little chart adds up to 12 or more then you know you have a potentially profitable property. Mastering all the keys to investing in real estate property takes time and practice, but now that you know what they are, you can start to look for those gems out there ready to make your investments pay off.
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