Recognize A Good Investment

Recognize A Good Investment
05-27-08
Many people get excited at the thought of investing in real estate. Everyone knows you can not make a bad investment when it comes to buying property. This is not the case. It is a myth created in the real estate world. You need to learn how to recognize a good investment.

There are many signs when you look for them. To recognize a good investment you must first know your market. This is done by researching the sales in the area. You may find a property for sale with the asking price of $100,000. It may seem like a good investment. If the properties in the area are selling for $95,000 this means the property in question is not a good investment. Should you find the properties are selling for $135,000 the property may still not be so good. You need to know how long it took the other properties to sell. When the market is moving slow, like six months to a year, the properties in this area would not be worth the effort. You should find another area.

You will learn to recognize a good investment when you start checking the neighborhoods where you want to buy. Areas full of empty lots, run down buildings, and other signs of recession should be avoided. Areas where there is new construction or signs of growth should be looked at.

Once you find a potential investment property, the real investigating begins. You will want to determine if there have been any upgrades or major structure changes in the property. The best way to do this is to check the permit office for any permits that have been pulled for the property. This will give you a better idea of what the property owner feels the home is worth. The reason you want to know this is because when you make an offer, you will want to know if the owner will stick to what they are asking.

You will also want to know if there are any plans to change the zoning in the area. This can make a big difference on whether the property is a good investment. If there is growth in the area, you may find the zoning is due to be changed from multi-family to commercial. This could make the property go up in value. The opposite is true with other zoning changes.

To recognize a good investment make sure the property is being sold under market value, the area is growing, and the zoning is going to be in accordance with what you are buying. Have a contractor inspect the property to determine if there are any major repairs which may need to be done. You do not want to buy something to sink money into it.

There are some properties in depreciated areas that can be bought for a song. These are the types of properties you may want to look at if you are planning on selling by land contract. Some of them can be bought for as little as $500 in certain areas of the country. You can fix up the outside and sell them for $1500 down and a set monthly amount. This can generate a positive cash flow very quickly. Take note the only thing you should fix on a property like this is the outside. The new owner will take care of the inside. These types of properties can be a good investment for the experienced investor.

As you make more and more deals, you will recognize a good investment when you see one. A good one can make you money. A bad one can cost you a fortune. You must know what you are looking for then investing in real estate.

Mark E. Moebius
Miljonair Homes
Custom home builder St. Louis
3451 St. Albans Rd.
St. Albans, MO 63073
636.300.9000