If you’re an investor, you love a great deal. You always look-out for quality things while purchasing them for the best price. It’s constantly searching for valuable items or properties to get your money’s worth. Through our experience, we’ve gathered tell-tale signs that you’re making a good investment. Here are the five things to note to know that you’ve found a gem in Los Angeles real estate.
No Zoning Issues or Liens
Before investing in a property, you must research any zoning issues or liens on the land. Talk to a professional who would know a thing or two about the property or read through available documents. If the potential investment doesn’t have appropriate zoning, then your initial plans for usage may not be possible. Also, if there are current liens on the property and you go through with the purchase, those liabilities become yours to pay; this would diminish your return on investment (ROI).
No Expensive Repairs
If a potential property doesn’t have large structural issues, it may be worth submitting an offer– especially if the price is right. For example, even if the kitchen is slightly outdated or not completely up-to-date with current tv design trends, as long as it’s functional, there’s no need to replace it immediately. Likewise, you don’t have to remodel every investment property you purchase directly after buying it. Instead, you can wait and space out those projects over time as your budget allows; what’s important is that the property is profitable first and foremost before investing any more money into improvements.
Before going ahead and purchasing the property, it’s good to take note of the potential renovations or remodels you will be doing in the future. Then, see if the amount you’ll spend will match the possible increase in value in the future.
Priced Near Assessed Value
If a property’s price is at or below the county assessed value, it is likely a good deal! Generally, the market value falls between 10-25% more than the county-assessed value. But beware: if a property falls too far below market value, there might be some underlying reason–maybe damage or another issue. If you’re lucky, you’ve found an extremely motivated seller with great property. However, it’s possible that what you’ve stumbled upon is bank-owned land in disrepair.
Passes 1% Rule of Thumb
In general, real estate investors use a general guideline when determining whether or not the price of a property is a good deal. They recommend that the property rent for around 1% of the purchase price. If a home should rent for $1,400, then the ideal purchase price would be no more than $140,000 to turn a profit. To apply this rule, you must first calculate the property’s fair market rental potential. Be careful not to mess up the calculation; consulting with a professional about these numbers may help you avoid mistakes during your investment.
Curb Appeal
Having decent curb appeal on a property is great and can save you money that would have gone into renovations. To decide if the property has good curb appeal, look at its silhouette and make sure it appears square. In addition, check to see if the roofline slopes slightly or matches the overall look of the house. Finally, be wary of differences in siding treatments on the home; this may indicate an addition that is structurally unsound. Take your time in assessing the area carefully. You can make sure that no stone is unturned so you can make a careful and wise decision on your next investment.
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