How to find out if property is worth investing

Question

I know few people in the area i live in that have rentals and i wanted to know what is the market value in my area

So i can know what to offer, they are not putting for sale but these people are elderly who might sell if  i just asked

Bjorik Mutize · Answer

Perfect, so yes you would want to compare to other comparable 4-plex's in the area as far as amenities, condition, age, rents, and of course other factors. You want to make sure you are at least competing fair market value to other properties or ARV. Come up with a fair purchase price that you can justify all of the above.

Now for your rents, what is your market rents you can achieve and how long will it take you to get them? How is the property operating right now and how can you decrease current expenses and increase your income? Are you going to renovate it?

If you are serious, try and get a financial statement and rent-roll's from the seller. I'd underwrite the property how it's operating currently and see if it is at least profitable at the purchase price you get above. Also get a business plan on how it will operate on how it if you can increase rents and possible decrease expenses. If it works(be conservative) move forward.

I would speak to plenty of lenders to see what type of debt you will be looking at. After you decide to offer for it ensure you do some very thorough due-diligence to make sure everything checks out!

Christina Linn · Answer

@Emad Nasser you can make money with any class. I prefer B-C, but one’s preferences are definitely unique. I would not buy a class A property to rent out, but there are plenty of people who make lots of money doing it.

Emad Nasser · Answer

yes it is Class B neighborhood and i believe this is where i should start .

Class A will require more money and more risk and class C is headache, what do you think ?

Emad Nasser · Answer

thank you So much for the information

Bjorik Mutize · Answer

Also, an agent may help you seeing if it is worth buying and provide you with preliminary info, however you would want to learn how to do most of this yourself.

Christina Linn · Answer

@Emad Nasser it depends on the condition and age of the properties, but it sounds like a class B neighborhood.  If you compare listed price to sold price it will help you come up with an offer, as well.  In my market I don't care about list price, because it's not at all indicative of actual sale price.

Emad Nasser · Answer

@Bjorik Mutize i am looking at 4plex building which i am living in now which rents for 850$ a month.

I’d like to hear from you

Emad Nasser · Answer

@Christina Linn yes they are public in my state, i noticed most sold properties even show the price it was sold for in apps like realtor and redfine.

These types of researchers that a lot of real estate investors talk about is what i am trying to learn step by step.

I can go through a street in my town and see houses valued around 150k and some that are below 100K and which and a lot of houses are for sale so what kind of market i am in ?

Bjorik Mutize · Answer

Comps.

Maybe to better assist you what type of properties are you looking into? Single family homes?

Christina Linn · Answer

Some states have public sales prices. The best place to start would be to check with your County Tax Assessor to see if this information is public, but there’s much more to value than similar size and rooms. It takes a lot of research, but you can certainly get an idea of value; it gets easier with time.

How to find out if property is worth investing

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