Wednesday, October 23, 2013

Real Estate and Wealth Building - What Do You Need to Know Before Buying Real Estate?

Everyone wants to get a bargain when they buy real estate. I've NEVER met anyone who said, "I hope can find property to buy today and pay the owners a lot more than it is worth."

But what you may not realize is that not everyone is trying to sell their property at retail market value.

I know that may sound a little crazy when you first hear it. But the fact of the matter is that people sell real estate for a lot of different reasons. And sometimes those reasons mean that a quick sale is more important to them than selling for a high price.

The most critical factor in real estate purchases is finding the "true value" of a property.

Once you know the value of a property, you'll know whether you are getting a bargain or a money pit.

After you've figured out the true value, there are other things you will need to consider:

* after repair value - what will the property value be after needed repairs?

* the comparative market analysis - how does the property compare to similar properties?

* gross rent multiplier - is this property worthy of further research and consideration?

* capitalization rate - what is the valuation of a rental property?

* vacancy and credit loss - what if you have no tenant?

* gross potential 1ncome - what will your potential fully-occupied rental income be?

* and much more...

There's a saying in real estate, "You make your money when you buy a property, not when you sell it." Don't make the mistake of buying a money pit. If you educate yourself and buy correctly, you can follow the footsteps of others who have generated their fortunes by buying real estate wisely.

Remember: It's important to know both the market value of any property you are considering as well as its' personal value to you.

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