First, become familiar with the market in the area. Is real estate in the area in high demand or low demand? This helps determine how long properties stay on the market. Ideally, you want a property in an area with low days on the market. Talk to realtors in the area, research “for sale” ads in the newspaper or online and see what recently sold. What are people looking for? Find out what parts of town have historically higher or lower vacancy rates.
Choose a city or a part of town where the population is increasing or maintained rather than decreasing. Real Estate is a limited and valuable resource. Make sure to choose a valuable part of town. Select an area with good transportation systems, schools, stores and other public amenities (parks, restaurants, entertainment, etc.) What are the property taxes in the area? High property taxes are not necessarily bad and can indicate value of your location. What are the crime rates in the area? How are the employment rates in the area? If you plan to do any further development with the property, become familiar with the building permit process and other planned future developments.
Find a great deal. Checking the actual MLS comparisons is a great place to start. The staff at Big State Home Buyers provides a knowledge resource as well. Feel free to contact us to get your questions answered regarding any Houston area locations.
Lastly, consider the intended sale price. $125k indicates a good sales price, and properties below $130k make great cash flowing properties. After all repairs, purchase costs, and debt service associated with permanent financing after repairs, you can earn $300-$500 a month. Leasing the property for cash provides a way to pay off any loans. Staying below $450k prevents the need for a jumbo loan.
What is a Jumbo Loan? Click here.