This Is How Much You Should Pay For An Investment Property


Knowing the true value of an investment property can be tricky. Sometimes sellers ask for more money than what the property is worth. Here I will provide 3 strategies for you to learn in order to be an intelligent buyer and profit from your properties.

1. If it’s Not Making Money, It’s Not Making Sense. Although the location of the property has an impact on how much it is worth don’t let it fool you. If you are buying emotionally you might be seduced by location and looks, but if you are in this business for the profit, the most important thing you need to know is how much is the current rent per unit in this property. After you know the exact number you will multiply that for 12 (months), then for 5( years) and the result is the true value of this property at this moment.

2. Get Those Numbers Right. After you know the total gross income of the property get your calculator out and start deducting all the expenses. Things such as taxes, insurance, maintenance, utilities, and repairs. To have a better estimate you can request copies of statements or taxes in order to know what you are getting into.

3. Do Your Research. Try to find out as much information about this property and the sellers as you can. A good realtor could save you plenty of time but there is always other things that you can find out on your own. For example, by listening to the owner you can find out the real reason they want to sell. “For Sale” often means “I Need Help”, some people could be struggling financially, or having management issues. If you know what their problem is, chances are you will be more prepared to offer them a solution that will benefit both parties.

Now that you are knowledgeable about this information please share it with others so that they too make the best decision when investing in rental properties. Everyone looks at different things when investing in this business, what strategies did you use to find your property?

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