Buying investment properties can get tricky. Here’s what you should know about them in advance.
Do you want to know how much cash your house is worth today?
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.
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.