Every buyer wants to land a good deal when purchasing new property. Whether it’s a house or commercial building, most of us have a set of expectations.
Budgets happen to be one of them.
So, when you find property that’s for half the market value you’ve been expecting, you know the opportunity’s too good to let go of.
But how do you know that? How do you know that the property you’re planning to purchase is a golden opportunity? How do you know it’s not fool’s gold?
Use these tips to determine if the deal’s too good to be true:
Go with the 1 Percent Rule
When making an investment, make sure to follow the 1 percent rule. The rule is that you should be able to rent the property for at least 1 percent of its selling price. This will ensure a balanced and positive cash flow.
Keep Your Expectations Real
Once in a while, we’ll come across TV shows based on home renovations or properties. And that’s exactly what they are—TV shows.
They’re created to grab attention. Just because the protagonist has a nice house in a nice neighborhood doesn’t mean that every property will be the same. This doesn’t mean that you won’t find a good house in a good neighborhood. It does mean that you shouldn’t assume that the price of every property will be the same.
Don’t Forget About the “Cap Rate”
The capitalization rate is used to measure the value of different real estate investments. Sometimes sellers charge more for the property if they have a good reason to.
For example: it’s not uncommon for sellers to increase the price based on the size of the house. In a nutshell, they could be charging per square foot. Make sure you have an open communication with the seller and your real estate agent about this.
Don’t sign the deal until you negotiate the price and find common ground.
Find Out the County Appraisal Value
So, here’s how you know you’ve got a good deal on your hands: log onto the county appraisal district’s website. Look up the address of the property you want to purchase.
If the selling price is higher than the district county’s assessment then you know the deal’s not worth pursuing. If it’s less, then you know you’re going to make a profit.
Consult a Real Estate Agent
Of course, looking up a property and having it professionally analyzed are two different things. A professional has the expertise to distinguish a gemstone from a rock.
They’ll help guide you through the process and provide exceptional advice on how to identify which investment opportunity is beneficial for you.
Smith Top Team is a father-son real-estate duo that has a collective experience of 40 years in the business. We are the top listing agents in Camp Hill and have extensive knowledge of the real estate market in Camp Hill and Mechanicsburg, PA .
If you’re looking to buy or sell property in the area, contact us for a free consultation.