Is this a good investment property?
Is this a good investment property? I hear that many times. Think about it. How many times have you seen a run down vacant property in Western New York and thought that would be a good investment? But if you never have invested before how does one know?
Let’s talk about that Good Investment. How much profit you should allow whether you are buying a fixer upper or buying an investment property that is already rented or ready to rent or sell in Western New York. There are many factors that go into deciding if a property is a good investment or not. Don’t forget the most important thing to remember LOCATION! LOCATION! LOCATION!
Read Also: Commercial Real Estate Investment – What not to do!
You can be a successful WNY Investor! It just takes a lot of work and patience!
But for now let’s talk raw numbers and Real Estate Investment. There are as many different ways to analyze a Real Estate transaction, as there are ways to put a deal together.
Options to you include:
- There is software programs that will calculate your internal rate of return every year from now until the property is ultimately paid off and beyond.
- You can use spread sheets that you can buy to do the same thing
- You can use a calculator or a simple pen and paper method
No matter how you calculate it, there is something you need to remember. They all have one thing in common. It is an old computer term called GIGO or garbage in – garbage out. Why is this important to you? Well it will do you no good if you are analyzing the wrong numbers in your Western New York Investment property.
Read Also: If it seems too good to be true….
If you are looking at a fixer upper then you don’t want to have any more than 70% of after repaired value invested. After you purchase and repair you will have 30% equity which gives you options like:
- Sell it
- Refinance it and pull out some cash
- Rent it and hold it
- Lease option the property to someone
Read Also: How to Select Investment Property in Buffalo NY
So what goes into that calculation? Well if you only calculate the purchase price plus the repairs and subtract the new sale price in a flip you are not calculating the true profit on the property. Do you know what numbers you need to put into that calculation? Things like:
- Closing Costs for the purchase
- Carrying cost of any mortgage
- Taxes and Insurance
- Realtor Fees for the sale and the associated closing costs
- Your time and effort
Read Also: Five Biggest Real Estate Myths
What if you don’t have to fix up the property and you are going to rent it right away? What makes a particular home a good or bad investment? Want more information regarding Investing in Western New York, feel free to give me a call at (716) 743-5297 or fill out the contact form below…
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