A step by step approach is best in order to make a solid decision before commiting to the investment. Make a check list and use it. And dont forget to add these to your list.



Please Note: The following elements discussed are not listed in any particular order. Nor do they all hold the same value in relation to each other, but they must ALL be considered in their entirety. The property should meet at least one of the criteria, and should have no unjustifiable issues in any one single area.

I give you...THE LIST:

HOW MUCH AND WHY

Investors ALWAYS see the price first.

So the goal is to buy for cheaper then the current market value and sell within market value or above. so how come the seller is offering such a GREAT price. Is it to settle debt??? Is it due to divorce? Death in the family?

What problems does the property have if any? Old cracked and faulty plumbing? bad electric? If its a older craftsman style home those problems are very common. is the foundation in good order? Dont forget holding costs.

Holding costs are one of the biggest profit killers to investors. Taxes, mortgage, comissions to agents (both selling and buying) gas, electric...all theses things add up...and FAST.

If your not up on the market your shopping in...your going to loose money.

Price other property inthe area. Come as close to the size/style/lot size you are looking at buying.

PAY ATTENTON TO TERMS AND CONDITIONS

While price and location are important; dont discount other profit leveraging tools like the terms of the financing.

In some cases a full price purchase can allow you to leverage the terms to mean a lower intrest rate or smaller down payment.

STUDY THE LOCAL MARKET

Learn everything you can about the market your shopping in. What are the schools like? How close is the local hospital? Is there a local police station or sub-station? Also look at the floor plans of surrounding homes. How many bed/baths? whats the average price in the area? What are the prices of the last homes sold in the area? Etc..etc.

As the man said...it is all about location.

If your shooting for a long term tenet or residence then location is the second most critical thing to look at...however if you have a chance to turn a good profit for a ugly house in a less then 4 star area...that profit might out shine a nice little bungalow on the beach.

FIX AND FLIP AND FORCLOSURES

In the case of a fix andflip and some times a foreclosure. It is the job of the investor to facotr in the repair costs. A keen eye can save you lots of money in a very short time. (Not to mention a good understanding of home repair work)

Fixer properties are a treasure trove to a savy investor. If you have a good eye for details and can spot maintance problems you can make a nice return on your investment. Things like a bad roof, poor plumbing or a bad foundation can be very costly to repair. Once you have a idea of what your looking at for repair cost, do your self a favor and add a little buffer say 5%...just to be safe.

Understand the ZONE

Zoning provides an opportunity to put the property to a higher or better use and is an area many investors ignore. Higher and better use means that the owner is getting the most out of the land. For example, if a lot is zoned for three units but contains a single lot, then it is not getting its highest and best use. Or if a lot is zoned commercial, yet there's a three unit residential building sitting on it, it is not getting its best and highest use, like a business or a store.

These are often bargains because the price is based on current use. So the single unit residential is priced low while the double unit duplex could be sold higher or rented out. Harder to find as developers stay more aware of zoning allowances these days.

Classic zoning "no-no's" are garages converted to bedrooms. Non-permitted granny flats and detached garages.