A good deal is something everyone looks for while buying property. But if you don’t put in the required time and effort, you might get stuck with a property with many hidden problems and challenges.
It takes a keen eye to figure out if a home is actually worth its investment. Here are few tips that will help you determine if the property you are eyeing to buy is a good deal:
See if it matches the 1% Rule
First thing that you need to do before buying a property is to check the kind of rent it yields. As per the 1% rule the rent that the property yields should be at least 1% of its purchase price. Do some due diligence to analyze the fair market rental rates of the area before buying the property.
Look beyond the HGTV hype
If you want to score a good deal on the property that you buy you will have to forget the HGTV hype. Even if you buy one of the worst places on the block you can always renovate it slowly as your budget allows. Old appliances and Formica doesn’t always determine the real value of a property. They can be easily replaced as countertops.
Look At the Roofline
The roofline will tell you a lot about the condition of the property you wish to buy. Find out if it is the original roof or if something has been added on to it. See if it drains well. See how sturdy or weak it is.
Get a Sense of its Condition and Presentation
Apart from checking the condition of the property, you should also look at the way in which the home is presented, especially if you want to purchase the property at a discount. A property with no online photos is something which has zero curb appeal. You can expect to get a significant discount on the purchase price of such a property. You could even bag a quick sale.
Check out the appraisal value
You can’t determine the actual worth of a property unless you find out its real appraisal value. You should be able to get the value by plugging in the address of the property on the county appraisal district website. If the selling price of the property is below its appraisal value, you stand to make a profit from the property. A fair market value is something that is 10 to 20% over and above the assessment value of a property.
Price plays a major role when determining if a particular property is a good deal. If the purchase price of the property is less than 100 times its monthly rent, it is always a good deal. However, you also need to check out the location of the property before making your decision. Find out if the property is in close proximity to schools, shopping malls, hospitals, dentist clinics, and other retail stores. Also check out the public transportation facilities in the area.
