When buying a real estate property, every investor wants to have a good deal. And in order to get the best deal, you should consider three key determining factors, namely, condition, location, and price. However, finding a real estate property and determining if it’s worth your investment won’t be as easy as it may seem.
Here are some things you should know when investing in a real estate property:
1. County appraisal value and purchase price
Assessing the property’s county appraisal value versus the purchase price can help you determine your profit margin. You can easily visit the county’s appraisal website and search for the property’s address to look for the value assessment. If the real estate’s selling price is significantly lower than the asking price, it means that you can have a higher margin of profit when purchasing the property, as the fair market value will be 10%–20% over the county’s appraisal value.
You may also check out online directories such as Best Real Estate Directory for more information about real estate investment in San Diego, Orange, and Imperial Counties
2. Condition and presentation
The property’s condition and how it’s been presented in the market can significantly impact its value. For example, a real estate with no online photos will likely have less curb appeal than those that have. This gives you the opportunity to negotiate discounts, as the property’s listing agent may not have much to work with and might just be looking for a quick sale. However, this can also mean that the property may not be in the best condition and may have hidden issues.
Here are some things to look for when assessing a property’s condition:
- Mold and mildew – You should inspect the property for mold and mildew. These pose health risks to occupants, and treatments can be expensive depending on the severity.
- Plumbing problems – Check real estate’s plumbing and drainage system. You can simply do this by turning on every faucet and flushing toilets.
- Exterior tilts and cracks – In most cases, a simple exterior crack can signify deeper foundation problems. Inspect the property for cracks that are more than a quarter inch, and if you find some, seek the help of a structural engineer for a more thorough inspection.
Here are some important factors concerning the location of the property you’re interested in:
- Zoning laws – These laws are implemented to specify the types of businesses or dwellings that can reside in a specific area. Zoning laws vary from city to city and can significantly affect the value of a real estate property.
For instance, a zoning change from residential to commercial could significantly increase the property’s value, and a zoning change from commercial to residential could lower the real estate’s value considerably.
You should understand the zoning restrictions of the property, know if there are any proposed zoning changes, and look out for residential properties that have commercial opportunities.
- Property taxes – Property taxes should always be considered when investing in real estate, as high taxes can mean lower profits, and low taxes allows you to have a larger profit margin. Keep in mind that metropolitan areas have higher property taxes than rural areas. Ask your local tax assessor about the property taxes of areas you're interested in, as there will be locations that charge higher tax rates on investors compared with occupants or owners.
Always remember that a seemingly perfect property in the perfect neighborhood can sometimes have incredibly high property taxes, which can make it a bad choice for a real estate investment.
- Neighborhood – The property’s neighborhood is as important as the property itself. Real estate properties that are located in areas with low crime rates, well-manicured lawns, and near well-ranked schools have better value appreciation.
- Insurance costs – Insurance costs are another important factor to know when buying real estate properties. You should know the average insurance premiums of the properties in the area and compare the insurance costs of each property. Be aware of properties with high insurance premiums, as they may be vulnerable to natural disasters such as:
Investing in real estate can be profitable as long as you choose the right property to invest in. Always do your research and make sure to weigh out all the factors that can affect the profitability of your investment whenever making a purchasing decision. Use this article to help you find the best property to invest your money in.