Making money investing in real estate begins with determining the actual value of the property. This is the most important out of the many factors in real estate. The price of the property is determined with real estate comparables or comps. Being that this is the maximum amount a seller could expect to receive for a given property, it becomes the starting point for negotiations. This is where you, as a real estate investor, make your profit when you buy the property. Mess up here and it could become difficult to make money on the deal or at the very least the ideal profit you had hoped for.
When researching a property, you begin by comparing your target property with those in the surrounding area. Be sure you know the details of your property. The square footage, beds/baths, year built and location of your property are important criteria for determining how closely these other properties match or compare to your subject property.
When you check the comps, get them as close in square footage, beds/bath number, and year built to your own property. REIAComps also shows when they sold, how much they sold for and how far away they are from your house. As a rule of thumb, search for a sold date within 6 months to a year if possible, and under a half mile away. Also, check a map for a surplus or lack of major roadways near the property. This will certainly affect the actual value of your property. Perfect example is, if the comparable houses are all in a neighborhood, and yours is in a neighboring area, then it will most likely be valued lower, depending on the comp properties.
REIAComps will list the property's history and what value the county has determined for the property. You should pull surrounding addresses to compare properties to yours, again this is what will help you calculate your offer. Your comps sheet for an individual property will have several pertinent points. For example, when the details of the structure are listed, you can see if the electrical is standard or below average, or if any additions have been added, etc. If the electrical service is 'below average', then you have a good idea that it will need to be updated and can share this information with your buyers for accurate repair estimates. Remember it is always important to evaluate the property yourself to tabulate the repair list.
And there you have it, remember learning this process is crucial to making money investing in real estate. Do it right and you will see a bigger profit potential. Do it wrong, it could derail some deals and eventually you and your budding career as an investor. Always use REIA Comps to determine the best acquisition and ARV for any of the real estate deals you look at. Don’t for one moment let someone tell you the value of a deal. Let REIAComps help you determine that information for yourself.