Every potential real estate investor hopes to get the best property for the lowest price. And, we often make our profit when we buy a property rather than when we sell one. In fact, we cannot always count on a profit when we sell so a very good strategy is to make our profit at the purchase. How can we do this?
Here are some of the things we must know:
- the true value and the after repair value of a property.
- the cost of repairs: which repairs are necessary or desirable?
- the gross rent multiplier: will the potential rent you receive make the property worthwhile?
- what will happen if there is no tenant? Will you be able to carry a vacant property?
- the best and worst case scenerios of ownership.
- how to control or buy a property with little cash up front.
- how to buy a property that is in foreclosure and whether you should.
But, does the "best price" always mean the lowest? Not necessarily. There are many additional factors to consider including:
- the neighborhood and area: are there any projects of various types scheduled? How will they affect the value of your potential purchase?
- the vacancy rate in a given area: will you be able to rent your property?
- the potential for profit from an increase in property values: can you determine which direction real estate is heading?
- and many other factors.
Since the best price can be affected by a neighborhood, here's something else you may wish to consider. Living near your investments is most often a good idea. Why? It allows you to keep your finger on the pulse of the area. You are available if you are needed to make a decision (unless you hire a manager.) It's much easier to take care of any issues, pick up rent checks, or check on your property.
Getting the best price means you must do your homework and legwork. You must make sure that your potential investment property will be profitable. You cannot rely on instinct in such an important matter. Follow the necessary steps and you will be able to buy a property that you will be happy with at the best price.