We understand, even if you don???t, what you want when you talk about buying real estate investment properties in [market_city].?? It is for this reason that we help our clients find the best real estate deals at huge discounts. Because we care for our clients we thought it would be best if we could share with them some effective resources that would enable them to evaluate a profitable real estate investment deal. The best thing about these resources is the fact that they work effectively anywhere, no matter where you are.
When you look at the gist of it, evaluating a profitable real estate deal is a really simple procedure. No matter what you are buying real estate properties for, it is very important that you buy it just right (i.e.- not overpay for it)
So here are a few helpful advices we???d like to offer you-
How To Evaluate A Real Estate Deal – (for single family houses)
Here are a few things that you need to consider when you are evaluating a real estate deal:
- What will be the cost to get it back into a good condition
- What will be the market value of the property after renovation (you should be able to tell exactly what it is worth and how much can you sell it for once its fixed)
- It is important that you have all the information you need about renting the property and mortgage payment on the property. This will ensure that the property you???re buying keeps the cash flowing every month.
Although there are a lot of other things you should look out for, however these three are the major aspects to consider first.
Cost of Repairs
It is important to know what the property is going to cost you when you get it repaired and bring it back into good condition. You might need to get the roof repaired, get a new paint job done, or perhaps renovate the kitchen. The list is endless.
Contact a contractor beforehand and get estimates from them about the cost of repair for the property you???re buying. Once you have two three estimates from trusted contractors, add the price on your offer and go for the deal.
After Repair Market Value
Although this is a real simple part, a lot of investors get double minded about it. You need to consider the value of the property after you get it repaired and renovated. For this you should find out the value of other houses in the same area. Remember not to look at the Listing price but instead check out the actual price the houses in the area have been sold for in the past few months. This will help you determine the cost of the house if you sell it right away after repairs. Don???t get involved in a deal where you find yourself overpaying for a property and not being able to sell it for a profit in the next few months.
To do this you should contact realtors or appraisers who can help you determine the true value of a house. If you already don???t know one, talk to people around you, get contacts for a credible few and call them up today. Let them know you have a property that might want to sell in the future and ask them for estimates or an appraisal.
Buy And Hold For Rental??
If you???re going to buy the property and hold it for rental you will not have to worry about selling it right away. But the one thing that you???ll need to know for sure is its month to month cash flow. Therefore it is very important that you talk to a mortgage broker or a private lender to ensure what the monthly mortgage payment should be for the property you???re interested in.
Once this is done, you???ll need to find out the amount for which you???ll be renting the property on a monthly basis. The next step will be to find out the mortgage payment that will be the lowest on the purchase price of the property so that you can manage to keep the cash flowing. Make sure you don???t ignore other expenses in the entire account. Property taxes, maintenance expenses, property management fees and other money reserves should also be kept into consideration for the future.
So, your offer price here should be:
Monthly Mortgage – Monthly Rents – Operating Expenses – Taxes / Insurance – Monthly Cash Flow =??Offer
Simple, isn???t it?
One thing that you need to remember is that the more cash you bring in the deal, the lower your mortgage payment will be.
Making An Offer
Now is the time to analyze your real deal and make an offer. a lot of times the properties you find in our lists will already be discounted that we get an offer above our asking price therefore if you are really interested in a property you need to find out what is the maximum payment you can make for it and offer that. If you don???t do this perhaps you???ll lose the deal to someone who makes an even better offer.
Remember the golden rule; never overpay for a property. We care for our buyers and therefore we always give them a stern deal analyzing criteria so that they get attractive prices.
We really hope this guide has helped you sharpen your real estate deal analyzing skills. We???re looking forward to hearing from you in the future.
Any Questions? Please contact us anytime you like.
Have a great time investing!