Gauging A Potential Property for Investment
When considering whether or not you should invest in an investment property, it is essential to do your research in order to determine the potential for that particular property. While there is no foolproof way of gauging the potential for a property, there are several factors to consider when determining whether or not a property is a good investment. To that end, here are some steps you should take to gauge a potential property for investment
Step #1: Get to Know the Market
The first step you should take is to get to know the market where the property is located. This means running a sales comparison to learn more about other properties that have recently sold in the area that are similar to the one you are considering buying. You also need to research the rents and the demand for rentals in the area so you can have a better idea of the returns that you can expect to see from the property.
Step #2: Explore the Area
Next, you should get out and take a drive in the area where the property is located. This will give you a better idea about traffic in the area, including whether or not it is congested and what access routes are near to the property. You should also look for amenities such as access to public transportation, shopping and dining opportunities, green space and more. As you drive around the area, get out of your car and talk to the managers of local businesses and residents of the area to get a better idea of what they like and don’t like about the neighborhood. If you don’t care for the things you see in the neighborhood, potential renters will likely feel the same.
Step #3: Collect Community Data
While everything may look great about the community after you complete a drive-through, you should also collect some local statistics in order to see how the community looks on paper. Information to investigate includes:
- Quality of schools
- Crime rates
- Median income of residents
- Unemployment rates
- Population count
If all looks well, it is time to start digging deeper into the property itself.
Step #4: Analyze Property Data
Next, you should gather data about the property itself. By accessing public records, you can obtain information such as:
- Current mortgage on the property
- Last sale price of the property
- Liens on the property
You should also gather information about other expenses associated with the property, such as:
- Property taxes
- Utility costs
- Insurance costs
By examining all of these factors, you will be better able to determine the actual cost of your investment while also having more information to use as part of the negotiation process.
Step #5: Find Out About Zoning
Before you close on a deal, you need to find out about zoning or any other restrictions that might affect the potential of the property. This is particularly important if you plan to develop the property in any way after making a purchase.
At Ankor Management, we can help you with the steps involved with gauging a potential property for investment. Contact us to learn more!