Buying investment properties can get tricky. Here’s what you should know about them in advance.
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Whenever I’m looking at purchasing an investment property, there are certain criteria I use in order to determine if a home is going to be a wise investment. Each time I see an extra cost, I discount that from my offer price. Here’s how I get to those final discounted prices.
First off, every situation and every house is unique. They all have different locations, conditions, and situations surrounding them. However, the approach I take in discounting the home is identical with each one.
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Each situation is unique.
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First I determine how long I will own the property. Most of the time it will be between eight months and a year. Then I start to factor in other costs.
The big piece is how long and how much the renovations and rehab are going to take. Then I consider “carrying costs” such as property taxes, home insurance, and utility bills. I’ll also look at how long it will take me to re-sell the home once the rehab is complete by studying the average days on market in the neighborhood.
Usually, sellers understand the method to my madness when I spell it out for them. If you have any questions for me or would like help buying or selling an investment property of your own, give me a call or send me an email. I look forward to hearing from you.