“For the seller, they are giving up their home, where they have all these attachments. And for the buyer, it is about painting a picture of their new lives and then carrying them through the whole process to a positive result.”-Sally Forster Jones
No doubt, the decision to buy a home and finally afford it is just as exciting as the selection of prime real estate property is. Indeed, after months or even years of saving up, the prospect of buying your first home can make you feel truly giddy to the core. However, before you make any hasty decisions, know that buying real estate—regardless of whether this is your first, second or even fifth one—is a process that is not to be taken lightly. Apart from being more than just a little discerning about the real estate properties you are considering, you need to ensure that you are getting a good deal out of your investment—that the house you are potentially considering in buying is worth it. After all, every buyer who invests a significant portion of their savings or income would want an excellent deal on their real estate purchase which begs the question: What makes a home an excellent investment or good purchase?
Well, before you start asking for BGC condo prices, it would make sense if you were well aware of what makes a good real estate investment first. Primarily, price plays a pivotal role in determining whether you will potentially score an excellent real estate deal. However, know that location and condition vastly outweigh the price point particularly since finding a property that can be overhauled with minimal effort and time is a rather difficult task. In any case, the prospect of buying a house with the intention of fixing it up is one that is often fraught with complex challenges—especially since there are bound to be a myriad of hidden problems that are not easily identifiable. In this regard, it is imperative to be able to ascertain whether a particular property is worth the investment and develop a keen eye for worthwhile deals. In any case, here are some of the best tips for establishing whether a particular real estate property would be worth your time, effort and money or not:
1.) Follow the 1% rule
While there are many ways to evaluate your returns on investment when purchasing income property, the 1% rule is a steadfast technique that does the trick. This strategy basically states that any income property should rent for at least 1% of the total purchase price to at yield a positive cash flow. With this in mind, it would make sense for you to analyze the fair market rental rates in the area before even considering making an offer on real estate property.
2.) Check for any zoning issues and liens
Before saying yes to a prospective real estate property, know whether the title is clean and whether or not the property is not under any ownership contest by litigation. From a general standpoint, most investors tend to stay away from properties that have any lien or zoning issues. Apart from potentially having your ownership contested, these properties are far too expensive for retail DIYS and it does not have enough meat for institutions.
3.) Check the cap rate
Knowing the cap rate (The price and earning ratio) is imperative. Cap rate VS. the neighborhood would make one signal of a potentially good real estate investment. However, do know that at times, there are legitimate reasons for why some sellers are more motivated than others. Just keep in mind that the price per square foot versus the neighborhood comps will count for a lot and would likely form an important standard metric when used appropriately. Similarly, be on the lookout for any successive price drops as this is an excellent indicator for a good buying opportunity.
4.) Take a gander at the presentation and condition of the property
While the presentation is important, do not let that sidetrack you from having a keen eye on the property’s overall condition. Remember, some presentation details are primarily setup to either conceal or trick the eye so be sure to keep a meticulous and observant eye out. Know that the condition of the property plays a pivotal role in determining whether its asking price is justified or whether or not the price point can be haggled. If it does not have any photos put up online then there is a likely chance that it has no curb appeal. Be on the lookout for small details such as that so that you would know whether can ask for a discount.