Indianapolis, IN · Member since 2013 · 23 posts · 0 votes
Those that do buy and holds, how do you judge if a deal is a good deal? Do you compare the property with other properties in the area, or do you use a formula? Also, are there laws to be aware of in the state you live in when investing, such as buying and holding?
SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
12y
Know your market, know what a house is worth in the area you are looking in, know the trends in both price and rent for the area.
I work primarily in 3 zip codes, I know those areas well (but know of parts of those I won't invest in),,you should know whats going on with the schools, any development planned in the area employment opportunities or potential layoffs,,knowing the area (and of course the knowledge you get from biggerpockets) will help keep you from making a mistake.
I look in other areas from time to time, but when I do I have to do a lot more due diligence
SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
12y
Know your market, know what a house is worth in the area you are looking in, know the trends in both price and rent for the area.
I work primarily in 3 zip codes, I know those areas well (but know of parts of those I won't invest in),,you should know whats going on with the schools, any development planned in the area employment opportunities or potential layoffs,,knowing the area (and of course the knowledge you get from biggerpockets) will help keep you from making a mistake.
I look in other areas from time to time, but when I do I have to do a lot more due diligence
Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
12y
Like Andy said know your market. I check the areas that I'm interested in almost daily, and get email updates for properties that im interested in. After a few months you'll know what's a decent deal and whats not.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
12y
My husband built a spread sheet that shows cap rates and interest based on the downpayment. I have areas that I specifically focus on. This allows me to focus on the best houses that come up in our area. We created this spreadsheet because it reduces the "heart" and makes it more black and white.
Seattle, WA · Member since 2014 · 44 posts · 4 votes
12y
basically it take times and experience, to learn the local market. when I first reading the forum in BP, people talk about rule of thumb of x%, and how the math work out, etc.
Then I start thinking about how does that apply to the Seattle market and I asked myself, these number doesn't make sense at all, we just don't have property that cheap, or I just don't know about it, so the rules, or the math and numbers just don't work.
Just need to learn your local market and find out the set of rules and numbers that work.
Investor · Nipomo, CA · Member since 2011 · 227 posts · 76 votes
12y
First, you must learn as much as you can about the market you plan to invest in. Home values, different communities, school districts, average rents, are just a few things you will need to learn. Educate yourself! You work hard for your money and the last thing you want to do is make a bad investment that could have been avoided with some simple education. So educating yourself is very important to do first.
I buy my rental properties based on cash flow, cash on cash return, condition of home, age, and location, location, location, are all important. You can use the BP Calculators if you don't have a financial calculator of your own to figure out what your cast flow and cash on cash return will be. Everyone has to decide what kind of return they are happy with. Personally, I prefer 25% or more cash on cash return. Sometimes you get lucky and will hit a grand slam, but base hits will get you there!
Also, as far as the type of home that seems to be what I call "the bread and butter" properties, I prefer 3BR 2BA 2CAR Garage in "B" or "C+" areas with a good location in that community. However, we own 2BR-4BR, 1BA-2BA, No garage to 3CAR Garage.