1. Check For Zoning Issues And Liens
Generally speaking, one way to tell is when a property has a characteristic or complication that leads to an automatic “no” for the majority of investors. Zoning issues and liens on smaller non-institutional grade property are a sweet spot. These properties are too expensive for retail DIYs but not enough meat for institutions. – Colin Bogar, Property Passbook
2. Follow The 1% Rule
There are many ways to evaluate investment returns when purchasing an income property. As a general rule of thumb, I always advise my clients to use the 1% rule as an investment strategy. The 1% rule states that the income property should rent for at least 1% of the purchase price to yield positive cash flow. The due diligence would be analyzing the fair market rental rates in the area. – Alex Chieng, A & L Real Estate Team
3. Let Go Of The HGTV Hype
In order to score a great deal on a property, buyers need to forget the HGTV hype and let go of lofty expectations. Buy the “worst” place on the block and slowly renovate as your budget allows. Formica and old appliances won’t kill you, and the there is a lot to be said for the value of location over the perceived value of something as easily replaceable as countertops. – Elizabeth Ann Stribling-Kivlan, Stribling.com
4. Check The Cap Rate
Cap rate (i.e., the price/earnings ratio) vs. the neighborhood is one such signal, although sometimes there are legitimate reasons for some sellers to be more motivated than others. We’ve also found price per square foot or price per door vs. neighborhood comps to be important metrics, when used properly. Successive price drops can also signal a good buying opportunity. – Larry Solomon, TheGuarantors
5. Look At The Roofline
Look at the roofline. This is a trick taught to me by a well-known home inspector, Dylan Chalk, author of The Confident House Hunter: A Home Inspector’s Tips for Finding Your Perfect House. Dylan has done structural inspections on about 5,000 homes. It’s the first thing he looks at. It can tell you if the house looks sturdy, complicated, simple, elegant, vulnerable or weak. Is it original or has it been added to? Will it drain properly? Rooflines reveal. – Kevin Hawkins, WAV Group, Inc.
6. Get A Sense Of Condition And Presentation
The condition of the property along with how it has been presented will usually dictate if the property can be purchased at a discount. So if the property doesn’t have online photos then it likely has zero curb appeal. It also means that a significant discount can be requested on the purchase price and that the listing agent doesn’t have much to work with and could just be after a quick sale. – Engelo Rumora, List’n Sell Realty
7. Assess Purchase Price Vs. County Appraisal Value
I can immediately determine if a property is a good deal just with an address and the county appraisal district website. Plug in the address and if the selling price is way below the county’s value assessment, you have a 90% chance you will profit from this property. Why? Because fair market value is determined by the county’s appraisal value plus 10-20% over their assessment. This is always the first step. – Angela Yaun, Day Realty Group
If you can buy an investment property for $900,000 and rent it out for $9,000 per month (or more), then it’s likely a good deal. While it greatly simplifies all the factors in real estate investing, looking at the price as a factor of 100 times the monthly rent is a quick and easy baseline to getting a great price on a real estate investment.