Understanding Property Values
Before You Invest In Real Estate
By Charles And Kim Petty
The author has permitted the reprinting and redistribution of this
article.
Reading or hearing about attractive benefits of real estate investment
may lure you into making a substantial investment in haste. This kind
of haste can potentially land you in a heavy loss rather than profit.
Real estate investment is a kind of sensitive and volatile venture. It
requires a certain amount of self-education and exposure on your part
to make a substantial profit in real estate. To understand property
values is the first step to a profitable real estate investment. Even
though it may take time to master the skills to understand property
values, you may benefit from the following information.
As part of learning the ABC of property value, it is relevant first of
all to know that 'comp' is real estate jargon, which refers to all the
homes sold within a span of the last 6 months and within an area of two
miles. So, when you target buying a home, first of all find out its
listed price. Then compare this price with that of recent comps of
similar quality and size. Does the listed prices match the recent sale
prices If the listed price happens to be less or even the same as the
recent sale prices, you wouldn't probably think twice and would
transact the deal at your earliest. Suppose you have decided to buy a
three bedroom, two baths home listed at $200,000. If this price is $10
thousand more than another three bedroom, two baths home sold only
recently a few blocks away, you may jump to a conclusion that you are
being taken for a ride. But it needn't be so.
What you should do now is to examine the sale prices of both the homes
more closely by taking into consideration the differences between the
home, you want to buy and the closest comps. Find out details about the
property priced $10 thousand more. Does it have any special features, a
bigger lawn, have extra constructions, or a pool If you find any of the
answers to these questions in the affirmative, then the chances are
that the asking price is quite reasonable. In order to figure out, how
much those extra features add to the value of a property, you can't
just depend on the facts and figures gathered from public information
sources. Glancing through dailies or Sunday newspapers won't teach you
the basics of property value. You will have to do some homework to make
your own chart of comps. The key to your success is try to know as much
as you can about the homes currently listed on the market. Make
detailed written records of such properties, in order to learn about
property value in a systematic way. For instance, if you come to know
that a basic three bedroom, two baths home built on an average-sized
lot sold recently for $190,000, whereas the same type home on a lot
twice that size sold for $200,000 in the neighborhood, you can learn
that a very large lot adds $10,000 to the value of a home in that
locality. This kind of comparative study gives you a good understanding
of the basic value of certain property characteristics. Update your
knowledge to keep up with online listings, visiting open houses, taking
detailed notes on sales prices.
Once you have developed a sound understanding of property value and
have gathered enough confidence, you can take a plunge into real estate
investment.
For a FREE Special Report and CD from Charles and Kim Petty and to set
up a one on one strategy session on how you too can make Six or Seven
Figures A Year Buying and Selling Properties across the USA
&abroad go to httpwww.VirtualRealEstateInvestingProfits.com or
call 1-800-311-9228.
If
you would like to take advantage of the market and learn how to invest
in real estate and you are local to the Dallas Fort Worth area, I know
a really great teacher and mentor here in Arlington Texas. Please take
a look at his web site: DennisJHenson.com,
Dennis has a great Mentoring and training program, I know because I am
one of his former students. I learned a lot from his one on one
teaching technique. - Michael Harman 817-457-7572
mchfun.business@gmail.com
http://www.biggerpockets.com/articles/