Buying an investment property can be an exciting experience, but it’s essential to consider a few very important points as you decide whether to purchase the home as an investment. So in today’s article, The Short Sale Gal Kristine Zelazo will discuss the process for evaluating investment properties to determine if it’s going to be a profitable investment.
EVALUATING INVESTMENT PROPERTIES – CONDITION
The first and most important consideration is the condition of the home and the amount of work that would be required to repair any flaws and upgrade any out of date areas of the residence.
Accurately predicting the cost of repairs and upgrades is absolutely essential because it will determine how much potential profit exists in that particular home. Underestimating the cost of repairs is one of the most common errors that new investors make and it’s a mistake that can be quite costly.
For instance, if you buy a property for $100,000 and it requires $20,000 in repairs and upgrades, then you must sell the property for more than $120,000 in order to turn a profit. If the home’s market value is $150,000, then this leaves a healthy $30,000 profit (and it allows a sizable buffer in the event that repairs and upgrades are a bit more expensive than expected or the home sells for less than expected.)
It’s best to work with an experienced contractor who routinely deals in fix and flip projects, as they’re better positioned to evaluate the home and identify any less-than-obvious issues that may exist.
A thorough home inspection is also recommended, as an inspector is trained to find the less obvious issues that may not be apparent to the casual observer.
Of course, it’s always wise to over-estimate the cost of repairs and upgrades. So if there’s a price range for a particular repair (e.g. $500 to $700 for a particular fix) always go with the higher figure.
EVALUATING INVESTMENT PROPERTIES – CURRENT MARKET CONDITIONS
Investors should also consider the average amount of time that homes are currently spending on the open market. Ideally, you should ensure that you get a larger profit if you have to hold the property for a longer period of time.
It’s wise to examine the local marketplace trends at the time you make the purchase, as a matter of weeks or months can make a really big difference in whether your investment property spends days, weeks or months on the real estate market.
For investors who would like to wait until the market is stronger before selling, you can maintain the property as a rental. Renting the property is another strategy that enables you to recoup profits if you spend more than expected on repairs and upgrades. Therefore, it’s important to consider whether the property could potentially be a profitable rental holding if you believe you may go this route.
EVALUATING INVESTMENT PROPERTIES – SALEABILITY AND LOCATION
As a real estate investor, the key is to sell the property in a timely fashion. For this reason, saleability and location are two very vital considerations as you consider a piece of real estate.
It’s wise to look at the local real estate market statistics, such as time spent on market, average sale prices and the local volume of homes on the market within that community.
GETTING INVOLVED WITH REAL ESTATE INVESTING WITH KRISTINE ZELAZO, THE SHORT SALE GAL
If you’re in search of an investment property, wish to get involved in real estate investments such as buying short sales, but are unsure of where to begin, turn to Kristine Zelazo, the Short Sale Gal! In addition to helping buyers and sellers with short sale transactions in South Florida and beyond, The Short Sale Gal Kristine Zelazo also works with a small number of real estate investors who are seeking to get involved in short sale investing, rehabbing and fix and flipping properties.
Kristine Zelazo has years of experience in the real estate investing field, so she’s well-positioned to provide guidance to new investors who are seeking a mentor and business partner.
In addition, The Short Sale Gal also serves as a short sale expert and licensed Realtor, assisting individuals who are seeking to sell their distressed properties in a short sale in South Florida and beyond.
If you’re seeking to sell your home in a short sale or wish to sell your home to an investor, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Questions? Call 800.664.0616, x802.