As an investor, you are always looking for a great deal, but how can you tell? Here are 5 signs of a great deal when buying Little Rock real estate.
5 Signs of A Great Deal When Buying Little Rock Real Estate
No Zoning Issues or Liens
It is important that you look into your potential deal for any zoning issues or liens on the property. There are many softwares on the market that allow you to do this or you can contact your local county to find this information. If the property you are interested in doesn’t have the right zoning, you may not be able to have that property be used for what you were planning or it may take a long period of time to have new zoning approved. It is also very important that your intended property does not have any liens on it, for if you did purchase it, they would then become your responsibility to pay, and that would cut into your return on investment.
No Expensive Repairs
If a property you are evaluating does not have any serious structural issues, which in most cases is foundation, then you should absolutely put in an offer. Even if the house has a fairly outdated kitchen, you don’t need to replace it if it is still working. It will be important to examine the quality of the kitchens in the neighborhood and try your best to not bring a product under or over the norm. You don’t have to do exactly as the HGTV shows do when they remodel every kitchen and bathroom every single episode. It is ok to remodel them as your budget allows, even if it take a longer amount of time. You have to make sure the property is profitable first before investing any more money than absolutely necessary.
Priced Near Assessed Value
If a property is priced at or below the county assessed value, you can be sure it is a great deal! you can expect the actual market value to be 15-20% above the county assessed value. You need to do your due diligence, because if a property is willingly priced that far below market value, it may have some extensive issues or other reasons why it is priced that way. There are two scenarios that may come into play here: 1) you found an extremely motivated seller who needs to get the property sold quickly or 2) you found a bank owned property that may have damage and/or liens attached.
Passes 1% Rule of Thumb
There is a general rule of thumb that real estate investors use when determining if the price of a property is a good deal. Most investors will use the formula that a property needs to rent for 1% of the price it was acquired for. If a property should rent for $2,000 then the ideal purchase price would have to be roughly $200,000 for it to be a profitable deal. In order to use this rule, you can use software to analyze the rent price of comparable properties in the neighborhood..
Sometime you will get lucky and run into a property that has great curb appeal and doesn’t need any work done in the front of the home! That is hundreds or possibly thousands of dollars saved from potential renovation costs. You will also want to take a look at the overall outline and shape of the home and make sure it looks proportional and does not indicate any structural damage. One way to do this is to pay attention to the roof! When homeowners add additions to their home they may use different materials or the additions may be done by ‘low quality’ contractors. What this means is that there could be different sidings on the home, there may be damage to the roof line causing it to slope, or the mis-matching addition could be harming the overall composition of the home.
If you are a real estate investor looking for a great deal when buying Little Rock real estate, then call Sunny Day Homes LLC today at (501) 400-0505. We will handle all of the legwork to look for your ideal investment property, simply provide the features you are looking for and we will provide you with some options.