subject: Real Estate Investing: How To Evaluate Deals [print this page] Real estate investing is a numbers game and investors who succeed in this game are those who know how to determine if a real estate deal is worth pursuing or not. This is the reason why it is important for a real estate investor like you to evaluate deals carefully before committing yourself. After all, studying your leads can help you avoid making mistakes that can cost you a lot of money.
For those who want to ensure the success of their real estate investments, here are some pointers on evaluating real estate deals:
After you have set up your marketing campaigns and leads have started pouring into your inbox, the first thing that you should do is to pre-screen your leads. Obtain valuable information from potential sellers by asking them questions such as what their reasons for selling these properties are or how much money they are willing to accept for their properties. Asking these preliminary questions enables you to separate a good deal from a dud.
Once you have singled-out a possible source of a profitable investment property, the next step would be for you to arrange a meeting with the seller so you can take a look at the house in question. Always remember that property inspection is important in the real estate investing business as it allows you to verify the profitability and the marketability of a potential real estate investment. Inspecting a property also allows you to determine the amount of repairs that the house requires. If you don't know how to properly inspect a house, meanwhile, you can ask a professional home inspector to help you accomplish the task.
Aside from conducting an inspection, you should also consider pulling comps (comparable sales) on the property. Pulling comps allow you to determine the market value of the house you want to invest in.
If you're exit strategy is to resell, or flip, the house, you should determine how much money similar properties are being sold for. Then, subtract the estimated cost of repair and other expected expenses from the projected sales of the house. This way, you can identify the amount of money you'll earn from the deal.
Like marketing and networking, evaluating deals is an important aspect of real estate investing. Hence, to ensure the success of your real estate investments, you mustn't forget to study your deals at all cost.
