subject: How To Tell If A Deal Is Profitable In Real Estate Investing [print this page] Successful real estate investing demands you acquire profitable deals regardless of your business model.
The following tips will help you identify profitable deals and weed out bad ones.
1) Market Value
You must have a property market value before you can buy it. When I buy houses, I prefer to work with conservative market value to be safe.
The county records market value of the property is a good indicator of market value. It is usually lower than comparable sales of homes sold in the area. However in a poor house market, depressed house values can be caused by foreclosures in the neighborhood. If you do not have access to the MLS, you might need a local realtor in your dream team to run comps for you.
2) Renovation Estimates
Most houses need restoration. You must have a fair estimate of the repairs needed without getting down to the nail and bolt. As you get more experienced, you can reliably estimate repairs by looking at a house in 5 to 10 minutes.
I try to estimate higher to stay safe.
3) Mortgage Balance
You cannot buy a property unless you know the mortgage balance. If the offer you make cannot pay off all the outstanding debts on the property and leave a room for profit, then it is probably not the best deal for you.
If a seller cannot provide mortgage information, they are not motivated enough to sell their house to an investor.
4) Sale Price
If a seller wants full market value for their house, they are not motivated enough for you. Unless they can leave room for profit for you, then you would better off moving on to the next one.
Sometimes, you might need to show motivated sellers your numbers so they understand how you arrive at your offer and leave room for profit.
5) Is It Vacant?
This will tell you how motivated they are to sell their house. Sellers who make more than one payment will want to sell fast. It also means you can take ownership of the house as soon as you buy it.
How do you receive this information?
The easiest way to have this information is to have a good real estate investor website. The website should serve to convince them you are the best person to buy their property and collect the information you need right on the website.
The form should ask for as little information as possible but just enough to know whether you have a deal or not.
The less information you collect the more response you will get through your website. This will save you lots of time because you will not talk to sellers whose houses you cannot buy.
You can then ask them for any information you need as you talk to them.
How To Tell If A Deal Is Profitable In Real Estate Investing
