As an investor, you are always looking for a great deal, but how can you tell? Here are 5 signs of a great deal when buying Austin real estate.
1. No Zoning Issues or Liens
It is important that your due diligence on a potential investment for any zoning issues or liens on the property. If the property you are interested in doesn’t have the right zoning, you may not be able to use the property for your original plans. It is also very important that your intended property does not have any liens on it, for if you did purchase it, they would then become your responsibility to pay, and that would cut into your return on investment.
2. No Expensive Repairs
If a property you are interested in does not have any serious structural issues, then it is probably worth submitting a fair offer, even more so if the price is right! Even if the property has a slightly outdated kitchen, you don’t have to replace it if it’s still functional or not destroyed. You don’t have to follow the TV hype of remodeling every kitchen and bathroom of every investment property you purchase. It is ok to remodel them as your own budget allows, even if it takes years. You have to make sure the property is profitable first before investing any more money than absolutely necessary.
3. Priced Near Assessed Value
If a property is priced at or a little below the county assessed value, it could or could not be a great deal. It truly depends on the property area. County assessed values vary from area to area so make sure you know before you buy. You do need to be careful though, if a property is priced so far below market value, it may have some damage or some other reason why it is priced so low. You may be lucky and have a seller that is extremely motivated with a great property. On the other hand, you may have just found a bank-owned property and it might have some damage.
Passes 1% Rule of Thumb
There is a general rule of thumb that real estate investors use when determining if the price of a property is a good deal. They say that the property should rent for about 1% of the purchase price. For instance, if a property should rent for about $1,400 then the ideal purchase price would be about $140,000 for it to turn a profit. In order to use this rule, you will have to analyze the fair market rental potential of the property.
If the property already has fairly decent curb appeal, then that is just icing on the cake! That is hundreds or possibly thousands of dollars saved from potential renovation costs. You will also want to take a look at the overall silhouette of the home and make sure it looks square and healthy. Another important factor of curb appeal is a straight roofline. Sometimes when additions are made or the property withstood damage, the roofline may slope slightly, or might not match the overall composition of the house. Another thing to watch out for is different siding treatments on the home. This may also indicate an addition that lends itself to having structural issues.
If you need help call us at Vista Ridge Properties, maybe we can help